ECB President Villeroy said interest rate cuts depended on inflation stabilizing at 2%

ECB member Francois Villeroy de Galhau clarified that any potential ECB rate cut would depend on whether inflation expectations remain firmly above its target, Spending Bank 2% of funds. In a recent statement, Villeroy stressed the importance of a data-driven approach to policy decision-making, suggesting that actions will no longer be based on predetermined dates.

Villeroy’s comments came as some investors expected a rate cut as soon as March or April, but he took a more cautious stance, saying the central bank should not rush to cut rates. This cautious stance is consistent with the ECB’s broader strategy to curb inflation without undermining economic growth.

Inflation rose most recently to 2.9% in December, partly due to technical factors, including base effects from past energy prices, which have had a significant impact on inflation. It is worth noting that the ECB’s current deposit rate is 4%, a level that has become part of the bank’s toolbox for managing inflationary pressures.

Villeroy’s emphasis on stabilizing inflation expectations is an important indicator of the ECB’s commitment to its mission of maintaining price stability. The European Central Bank appears to be taking a cautious but sensitive approach to its monetary policy in the face of economic uncertainty, according to the latest inflation data.

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