The European Central Bank should cut interest rates in June to avoid falling behind the inflation curve, according to one ECB policymaker.
"Barring a major surprise we should cut rates because we are now confident enough and increasingly confident about the disinflationary path in the euro area," Bank of France Governor Villeroy told CNBC's Karen Tso on Thursday.
Francois Villeroy de Galhau, governor of the Bank of France, during a panel session on the opening day of the World Economic Forum in Davos, Switzerland, on Tuesday, Jan. 16, 2024. The annual Davos gathering of political leaders, top executives and celebrities runs from January 15 to 19.The European Central Bank should cut interest rates in June to avoid falling behind the inflation curve, according to ECB policymaker François Villeroy de Galhau.
"There is now a very large consensus that it is time to take this insurance more or less against what I would call the second risk. The first risk is to act too early and let inflation go upwards again and this would be a danger," he continued. "But the second risk would be to be behind the curve and to pay a too high cost in terms of economic activity and employment."that it could cut interest rates in June.
A flurry of the central bank's Governing Council members have since remarked about the near-term prospect of loosening monetary policy, with ECB President Christine Lagardethat the central bank is on course to moderate rates "in reasonably short order" barring any major shocks.
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