(Reuters) – The European Central Bank has significant room to lower rates, while observers’ expectations for long-term monetary policy are reasonable, the Bank’s governor told the Börsen Zeitung newspaper on Monday. France, François Villeroy de Galhau.
François Villeroy de Galhau stressed that a rate cut in June was “a fait accompli”, while believing that the ECB should not limit itself to a single rate cut per quarter, as suggested by its latest economic forecasts which would exclude therefore a drop in July.
“I am not saying that we must commit to the July meeting, but let us keep our freedom on the timing and the pace,” added the member of the ECB Governing Council.
“For me, services inflation matters more than salaries or margins,” added François Villeroy de Galhau, while the dynamics of wages in the first quarter, calculated by the ECB, surprised on the rise.
In the longer term, the head of monetary policy does not consider the projections of observers regularly surveyed by the ECB, who expect the key rate to return to 2% in the long term, to be “not unreasonable”.
“This does not mean that we have to go down to this rate, but that with a key rate of 4%, we have a significant margin to relax our policy,” added the governor.
(Report by Leigh Thomas, Corentin Chappron, edited by Sophie Louet)
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