PARIS (Reuters) – Geopolitical tensions in the Middle East should not disrupt the timetable for the rate cut by the European Central Bank (ECB) which is due to take place in June, François Villeroy de Galhau, governor of the Bank of France.
“No, unless there is a surprise: we should not wait too long (…) This is the meaning of a first drop at the beginning of June; it should be followed by other drops, according to a pragmatic rhythm,” declared François Villeroy of Galhau on the daily Les Echos.
“Today, the conflict does not lead to a marked increase in oil prices. If this were one day the case, we would have to analyze for monetary policy whether this shock is temporary and limited, or whether it is transmitted – beyond raw materials – to the famous underlying inflation and inflation expectations”, also declared François Villeroy de Galhau, referring to the war in Gaza led by Israel and the tensions between the Jewish state and Iran.
The ECB indicated on Tuesday that it will likely cut rates in June, but several statements from members of the Governing Council on Thursday show that officials are divided on next decisions.
(Tassilo Hummel; French version by Zhifan Liu)
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