PARIS (Reuters) – The European Central Bank will undoubtedly reduce its interest rates during the spring, between April and the end of June, declared Wednesday the governor of the Bank of France, François Villeroy de Galhau, according to which the objective of 2% inflation is within reach.
“We are going to bring inflation down to 2% by next year. This is not just a forecast from the Banque de France, it is, barring any surprises, a commitment,” he said. he says on franceinfo.
“The consequences that we should draw from this, as the European Central Bank, is probably to lower rates in the spring,” he said.
Asked about the date on which such a decision would take place, François Villeroy de Galhau replied: “perhaps more probably in June”.
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The website of the European Central Bank mentions two monetary policy meetings between now and the summer, one on April 11, the other on June 6.
The money markets also consider a rate cut to be more than 90% likely in June, according to the ECBWATCH tool. Over the year, operators expect 95 basis points of rate cuts.
The governor of the Bank of France also returned to the economic forecasts delivered on Tuesday by his institution which now expects expansion limited to +0.8% in 2024 after 0.9% in 2023, a less optimistic projection than that of the government which aims to reach 1.0% after having forecast 1.4%.
“The government corrected its forecast to 1.0%, I believe it was essential. Today, we are at 0.8%, the government at 1.0% (…), this is the margin of uncertainty.”
“There is a certain resilience in the French economy,” he underlined while deploring that “the French economy (has) slowed down considerably since the Russian invasion of Ukraine”.
“There is an economic cost of this invasion that we are seeing.”
(Nicolas Delame, with contributions from Corentin Chappron, edited by Kate Entringer)
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