ECB’s Villeroy Signals More Rate Cuts Could Come Despite Current Challenges
European Central Bank policymaker François Villeroy de Galhau said on Tuesday that additional interest rate cuts remain possible, even in light of recent market developments.
Key Points from Villeroy’s Remarks
Inflation expectations are still moderate.
The recent rise in oil prices has partly offset the euro’s “significant” appreciation.
If a ceasefire between Iran and Israel is confirmed, the ECB could consider further easing over the next six months.
Oil prices alone are not a reliable guide for the ECB’s policy decisions.
He emphasized that the neutral interest rate is not the same as the terminal rate.
The ECB will continue to monitor how economic conditions develop.
Market Reaction
Following Villeroy’s comments, the euro rose. At the time of reporting, the EUR/USD pair was up 0.22% for the day, trading at 1.1603.
