There will probably be further reductions as inflation approaches its goal, according to François Villeroy de Galeau’s statements, a member of the Board of Directors of the European Central Bank ( ). “We are in the process of returning to our target of 2%,” he said today (4.2.2025) at a conference in Paris, repeating previous comments. “As you know, we started to reduce interest rates last June and decided on the fifth reduction last week and there will probably be others.” The ECB is expected to make a sixth reduction at the next meeting of policy makers in March. What will happen after this move – which will bring the deposit rate to 2.5% – is less clear, as uncertainties ranging from the US trade war to the political deadlock in Germany and France burden the prospects. CORVERSE Villeroy, who is head of the central bank of France, expressed optimism about his country’s prospects. “The French economy is developing slowly today and there are downward risks,” he said. “But we don’t see a recession coming in France”. The Bank of France currently predicts growth of 0.9% this year. “There are many objective reasons to worry, but there must not be excessive and self-fulfilling pessimism,” Villeroy said. “We believe recovery should come gradually in 2026 and 2027”.
Villeroy de Galaud: Forecasts for more interest rate cuts as inflation approaches 2%
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