MNI BRIEF: October ECB Rate Cut “Very Likely” – Villeroy
MNI (LONDON) - The European Central Bank will “very likely” cut interest rates again at its October meeting, as the balance of risks are "shifting” and dangers of undershooting the current inflation target are growing, Bank of France Governor Francois Villeroy de Galhu said in an interview with Repubblica published on Monday. (see MNI SOURCES: Chances Of October ECB Cut At Least 50-50 )
Weak growth and a restrictive monetary policy for too long risks inflation going below 2%, with financial markets now seeing prices at 1.8% next year, he said, adding that core inflation will gradually come close to 2% too in 2025.
If inflation stabilizes at 2% in 2025 there is no reason to keep monetary policy restrictive and to have rates above the neutral rate, Villeroy said, noting that for him the meeting-by-meeting approach was never only tied to cutting once every quarter.