The European Central Bank (ECB) still has room to gradually lower interest rates as inflation in the eurozone nears its 2% target, according to Governing Council member and Bank of France head François Villeroy de Galhau.
Speaking to RTL Radio, Villeroy emphasized that despite global uncertainty caused by U.S. tariff policies, Europe remains stable. He noted that the eurozone’s inflation rate fell to 2.2% in March, close to the ECB’s goal, and is expected to ease further. “We should achieve the 2% inflation objective, and that means we still have gradual margin for rate cuts,” he said.
While U.S. protectionist measures are slowing global growth and may even push the U.S. toward recession, Villeroy reassured that neither France nor Europe is facing a recession risk. The Bank of France’s outlook remains a smooth exit from inflation without economic contraction.
Earlier this month, the ECB cut its benchmark rate to 2.25%, marking the seventh reduction since June 2024. Investors widely expect another small cut in June, though policymakers show little appetite for a major move.
Villeroy underlined that the ECB’s actions aim to maintain stability and that no extra inflation is expected this year or next, despite external pressures.