ECB’s Villeroy: “If There Is a Next Move, a Rate Cut Is More Likely Than a Rate Hike”

15 October 2025

By Marta Vilar – WASHINGTON (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau said on Wednesday that if the ECB were to adjust interest rates again, the move would more likely be down rather than up.

In an interview with CNBC, Villeroy, who heads the Banque de France, said that risks to inflation were tilted to the downside, pointing to higher Chinese imports, exchange rate developments, and “other technical factors.”

“On the upside, there are little risks, especially after the trade agreement with the US, because the EU did not retaliate,” he said.

Villeroy emphasized that “if – and I stress if, as we are in a good position – there is a next move, a rate cut is more likely than a rate hike.”

Tariffs had negative effects on growth and the inflationary impact would emerge only later, partly due to frontloading effects in the first quarter of 2025.

He described the global economy as “resilient” but “suboptimal” because of tariffs and heightened uncertainty.

Asked about the stickiness in services inflation, Villeroy said that services inflation typically runs higher than goods inflation as it does not benefit from productivity gains or global trade.

“[S]ervices inflation is decreasing significantly and wage moderation, which is a key driver of services inflation, is there,” he said.

Addressing concerns over French fiscal issues, Villeroy downplayed risks of contagion to other European bond markets, calling it “more a French problem.”