“Unless there are any surprises”, the ECB’s first rate cut should take place on June 6, estimates Villeroy de Galhau

The governor of the Bank of France, François Villeroy de Galhau, indicated to the JDD to be published on Sunday that the European Central Bank (ECB) would, “barring any surprises”, decide to lower its rates on June 6, estimating that the battle against inflation was about to be won. “Unless there is a surprise, we should decide on a first reduction at our next meeting on June 6,” declared François Villeroy de Galhau, who sits on the ECB Governing Council.

The governor of the Bank of France justifies this approach by “increasing confidence in the trajectory of disinflation”. Inflation is getting closer to the ECB's medium-term target of 2%: it continued to decline in March in the euro zone, to 2.4% over one year, according to the latest figures from Eurostat. In France, the consumer price index increased by 2.3% year-on-year last month according to INSEE, a clear slowdown compared to February. “We are winning the battle against inflation,” says François Villeroy de Galhau.

While maintaining its interest rates at their historic high, the ECB prepared the ground on Thursday for a first cut from June. This decline “should be followed by other declines between now and the end of the year,” estimates the governor who “pleads for pragmatic gradualism – according to economic data – and sufficiently agile.”

François Villeroy de Galhau also returned to the weight of the French debt, while the government seeks to make savings to limit the public deficit, now expected at 5.1% of GDP for 2024. “The weight of debt interest that we have to pay every year (...) will increase by almost 50 billion between 2020 and 2027", notes the governor, "this is as much as we cannot devote to our future expenses, such as climate or education”. François Villeroy de Galhau also defended the “common sense” criteria governing the French real estate loan market, at its lowest level in almost 10 years. A bill from Renaissance MP Lionel Causse aimed at reforming the High Financial Stability Council (HCSF), which lays down, among other things, rules governing the granting of real estate loans, will be examined in the National Assembly on April 29.