PARIS (Reuters) – The European Central Bank’s next move should be a lowering of interest rates from record highs but first the ECB should “enjoy the view” for a while, French central bank chief Francois Villeroy de Galhau said on Friday, implying a rate cut was not imminent.
“The next move should, barring surprises, be a lowering,” Villeroy told Boursorama television, adding the central bank will be guided by economic data rather than calendar considerations.
“We are standing on a plateau where one should take the time to enjoy the view, which means to appreciate the effects of monetary policy,” he added, referring to a potentially prolonged phase of high interest rates.
His comments come a day after the European Central Bank pushed back against bets on imminent rate cuts, telling financial markets that inflation could soon rebound and price pressures remain strong.
The euro zone’s central bank intended to send a message of ‘confidence and patience’ to markets, Villeroy said, but added that recent rate hikes were trickling through into the real economy slightly faster than initially thought.
“Our forecast is (an inflation rate of) 2.1% through 2025, and this will also be the case for France”, Villeroy said in a hint to the French central bank’s next inflation outlook which will be released next week.
Separately, France’s INSEE statistics body on Friday released final inflation figures for November, showing EU-harmonised annual inflation at 3.9% – slightly higher than the 3.8% initially forecast.
A survey, meanwhile, showed French business activity declined faster than expected in December.
On Thursday, INSEE said country was set to see only meagre growth in the first half of 2024, forecasting a quarterly rate of 0.2% in both the first and second quarters after flat-lining in the last three months of 2023.
(Reporting by Tassilo Hummel; Editing by Benoit Van Overstraeten and Christina Fincher)
