ECB’s Villeroy: We must not wait too much on interest rate cut

ECB Governing Council member Francois Villeroy de Galhau, in a discussion with Les Echos, stressed that increase in oil prices due to conflicts in the Middle East would not trigger a “mechanical” policy shift. Instead, the bank would carefully assess whether these increases significantly fuel core inflation and inflation expectations before deciding on any action.

Villeroy made it clear that ECB is prepared to act without undue delay in lowering interest rates. “No — unless there is a surprise, we must not wait too much,” he said.

“From the point we have sufficient confidence in the fact that we will meet the 2% inflation objective by next year, our duty is to minimize the cost in terms of activity and employment,” Villeroy said. “That is the sense of a first cut in June.”