(Bloomberg) -- It’s possible that the European Central Bank will lower interest rates at each of its upcoming meetings, according to Governing Council member Francois Villeroy de Galhau.
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Officials’ task of bringing inflation back to 2% is on track, despite President Donald Trump’s threats of trade tariffs, the Bank of France chief told Bloomberg Television in Davos. That may allow the deposit rate to be lowered to 2% by summer from 3% now, he said.
“There’s a plausible consensus that we will go on acting at each meeting which we have successfully practiced since September,” Villeroy said Tuesday.
Investors are betting the ECB will lower borrowing costs four times in 2025, with inflation set to settle at their goal over the coming months and the euro-zone economy in need of a lift as political upheaval in Germany and France weighs.
Villeroy’s sentiments were echoed Monday by Slovakia’s Peter Kazimir, a prominent hawk. He told Bloomberg that three or four more back-to-back cuts are “feasible,” though stressed the need for flexibility to be able to react to new data.
Villeroy also played down the chances of a reduction in rates exceeding the quarter-point increments deployed so far this cycle.
“If we are decisive enough about this pace of the cuts, we don’t need now to increase the magnitude of the cuts, which could be another debate,” he said. “I wouldn’t exclude this possibility for the future, but this is what I call agile pragmatism, we should be ready to act.”
Discussing the so-called neutral rate of interest — an unobservable level that neither stimulates nor restricts economic activity — the French official said he sees it at 2% but added that there’s no need right now to discuss cutting below that.
--With assistance from Caroline Connan, Mark Schroers, Alexander Weber, Jana Randow and Alessandra Migliaccio.
(Updates with more quotes from Villeroy starting in sixth paragraph.)
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