The European Central Bank (ECB) should start lowering its interest rates in 2024, but will proceed without “obstinacy or haste”, warned the governor of the Bank of France, François Villeroy de Galhau, on Tuesday.
Presenting his wishes for the new year, Mr. Villeroy de Galhau recalled that the monetary tightening carried out forcefully by the ECB since the summer of 2022, until the pause decided last fall, had made it possible to reduce the inflation, without causing a recession despite slowed growth.
“In this context, and barring any surprises, the year 2024 should be that of our first rate cuts,” declared Mr. Villeroy de Galhau, member of the board of governors of the Frankfurt institution, without citing a precise period in the year.
“Our decisions will not be driven by a timeline, but data; and we must show neither obstinacy nor haste,” he explained.
He called for “patience”: “we will lower rates this year when the inflation outlook is firmly anchored at 2% (…) and sustainably”, this figure corresponding to the inflation objective pursued by the ECB.
In its forecasts published in December, the Banque de France predicted that inflation would reach 5.7% on average annually in 2023 and fall to 2.5% in 2024, measured according to the harmonized consumer price index (HICP). ) allowing a comparison between European countries. Inflation would then drop to 1.8% in 2025 and 1.7% in 2026.
François Villeroy de Galhau, however, underlined the possibility of a rebound “of a technical and temporary nature” in the price increase. As in December, when inflation rose to 2.9% over one year in the euro zone, after 2.4% in November.
In France, the consumer price index (composed differently from the HICP), measured by the National Institute of Statistics (Insee), jumped to 3.7% over one year in December, after 3.5 % in November, according to provisional data.