ECB's Villeroy de Galhau sees further rate cuts as next policy move

If the European Central Bank (ECB) decides to adjust borrowing costs within the next six months, it would most likely be a rate cut, stated Governing Council member Franсois Villeroy de Galhau.

Earlier this month, the ECB signaled a pause in its monetary easing cycle, despite forecasts suggesting inflation in the region would fall below the central bank’s 2% target.

Meanwhile, escalating Middle East tensions drove oil prices 7% higher on Friday. However, the euro’s broad appreciation has largely offset the inflationary impact of rising energy costs. As Villeroy de Galhau noted, ECB officials are closely monitoring this situation.

According to the regulator’s forecasts, the region’s consumer price index has already fallen below 2% in the second quarter of 2025 and will return to the target by 2027. Villeroy de Galhau stressed that the ECB must remain vigilant and prepared for sudden shifts.