PARIS (Reuters) – There is broad consensus within the governing council of the European Central Bank (ECB) that a first cut in ECB interest rates will “very likely” take place in the spring, a declared François Villeroy de Galhau on Friday.
“There is today a broad consensus to consider that the risks are balanced,” declared François Villeroy de Galhau, member of the board of governors and governor of the Banque de France, on BFM Business.
“We must guard against two pitfalls: there is the pitfall of haste – that is lowering rates too early and risking missing our 2% inflation target – but there is also the The pitfall of tension is acting too late and weighing too much on activity,” he recalled.
“We have more and more confidence that we will bring inflation down to 2% by next year (…) and therefore there is a broad consensus on an upcoming rate cut, to put it another way it “There is a broad consensus to prefer gradualism to wait-and-see (…) It is the best way to insure against these two risks”, concluded François Villeroy de Galhau.
The governor of the Banque de France also estimated that French growth should be higher than the European average in 2024.
The ECB kept its key rates unchanged on Thursday – with the deposit rate remaining at the record level of 4% – but lowered its inflation forecast for 2024 to 2.3% compared to 2.7% previously expected.
(Written by Tangi Salaün, edited by Kate Entringer and Blandine Hénault)
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