2024-08-30 15:23:07
François Villeroy de Galhau believes, in an interview with Pointthat the ECB must act without delay to drop below the 2% inflation mark in the Eurozone, at the risk of being too late.
A further rate cut by the European Central Bank (ECB) in September, after that in May, will be “just and wise”assessed the governor of the Bank of France François Villeroy de Galhau in an interview a newspaper The point Friday August 30. Speaking following the publication of data showing a decline in French and German inflation below the 2% target set by the ECB, official judges called “We are not yet firm on our 2% inflation target, but we will most likely be there in the first half of next year for France and in the second half for the Eurozone”.
While inflation slowed to 2.2% year-on-year in August in the Eurozone, the next ECB government meeting will be held on September 12. “If we wait until we are at 2% to low rates, we will do it too late”argues François Villeroy de Galhau, who remembers that an increase or decrease in the value of money always takes some time before it is reflected in the real economy.
Key rates decreased in June
To stem inflation, the ECB has increased borrowing costs at an unprecedented rate from July 2022. On July 6, it lowered its key rates, giving a little breath of fresh air to ease tensions over real estate credit and business loans that slow economic growth. Acting as a reference, the rate on fixed deposits is 4%, the highest reached last September, thus reduced to 3.75%. At the next meeting in July, however, the ECB left its key rates unchanged.
Comparing the European and American economies in his interview, François Villeroy de Galhau showed that inflation was decreasing more rapidly in the Old World, but the growth was still less powerful there than in the United States. “The balance of risks therefore needs to be monitored even more in Europe. Our board of governors on September 12 will, in my opinion, have to act accordingly: it will be fair and wise to decide on a further rate cut. “said the governor.
Earlier in the day, his colleague Isabel Schnabel, ECB board member, called the institution to rest “slow and careful” its monetary policy, in a word in Estonia.
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