ECB set to cut interest rates in June, says member

Stable view: The ECB building is seen in Frankfurt, Germany in this file picture. The bank held interest rates steady for a fifth meeting last Thursday, with the deposit rate at a record high 4%. — AFP

LONDON: The European Central Bank (ECB) is likely to cut interest rates in June, according to governing council member Francois Villeroy de Galhau.

“Bar a surprise, we should decide on the first cut at our next meeting on June 6,” Villeroy de Galhau told Le Journal du Dimanche in an interview.

He added that he was more confident about the downward trajectory of inflation.

“Our cut early June will have to be followed by other cuts by year-end,” he added, though he ruled out a return to the ultra-low or even negative rates that were prevalent between 2015 and 2022.

The ECB held interest rates steady for a fifth meeting last Thursday, with the deposit rate at a record high 4%.

But the governing council flagged a possible reduction in its accompanying statement for the first time, contingent on its economic forecasts indicating consumer-price growth is safely headed to 2%.

In the interview with the weekly newspaper, the governor also added that France needs to seriously tackle its worsening public finances.

That’s after the French government said earlier this week that its deficit will be wider than anticipated this year.

The eurozone has seen six straight quarters of economic stagnation, the labour market is softening and inflation fell to 2.4% last month, not far from the ECB’s 2% target. — Bloomberg

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