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PARIS (Reuters) – It would be “fair and wise” for the European Central Bank (ECB) to cut interest rates again when its Governing Council meets in September, Francois Villeroy de Galhau said in an interview with the weekly Le Point published on Friday.
According to preliminary data released by Eurostat on Friday, inflation in the eurozone fell to its lowest level in three years in August, standing at 2.2% at an annual rate.
“Unfortunately, our growth remains weaker. The balance of risks therefore needs to be monitored even more in Europe,” observes the governor of the Bank of France, adding: “Our Board of Governors on September 12 will, in my opinion, have to act accordingly: it would be fair and wise to decide on a new rate cut.”
François Villeroy de Galhau considers that the 2% inflation target will “very probably” be reached in the first half of 2025 for France, and in the second half for the Eurozone.
“If we waited until we were actually at 2% to lower rates, we would act too late and we would run the risk of subsequently falling below our objective,” he emphasizes.
François Villeroy de Galhau adds that market expectations, which expect interest rates to fall next year in the euro zone to between 2% and 2.5%, seem to him “reasonable from today’s perspective, without this being considered a forecast”.
(Leigh Thomas, Camille Raynaud for the French version, edited by Jean-Stéphane Brosse)
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