Bank of France governor signals ECB rate cut in June

Francois Villeroy de Galhau, a member of the European Central Bank's (ECB) Governing Council, has indicated the possibility of further interest rate cuts in the eurozone. This potential move comes amid stagnant consumer price growth, despite the recent imposition of US trade tariffs.

Villeroy noted that President Trump’s tariffs would primarily impact US inflation, with minimal effects on the European economy. He reaffirmed the independence of EU monetary policy. The ECB’s current benchmark deposit rate stands at 2.25%, significantly lower than the US Federal Reserve’s 4.25% rate.

However, Dutch Central Bank President Klaas Knot has expressed opposing concerns, warning of medium-term inflation risks.

With ECB policymakers divided, the path for further rate cuts remains uncertain. The decision will be finalized at the ECB’s June meeting. Most analysts project two additional cuts this year, potentially lowering rates to 1.75% by December.