With inflation slowing to 2.2% year-on-year in August in the eurozone, the next ECB Governing Council is due to be held on 12 September.
Don’t act too late
“If we waited until we were actually at 2% to lower rates, we would be acting too late,” says François Villeroy de Galhau, who reminds the magazine “Le Point” that rate increases or decreases always take a certain amount of time before being reflected in the real economy.
To curb inflation, the ECB had raised borrowing costs at an unprecedented pace from July 2022.
On June 6, it lowered its key interest rates, offering a small breath of fresh air to ease the tensions on mortgage credit and loans to companies that are holding back economic growth. Serving as a benchmark, the deposit rate, which stood at 4%, its peak reached last September, was thus reduced to 3.75%.
At the following meeting in July, the ECB left its key interest rates unchanged.
Equal growth in Europe and the United States
Comparing the European and American economies in his interview with “Le Point”, François Villeroy de Galhau underlines that inflation is decreasing more quickly on the Old Continent, but that growth is also less dynamic there than in the United States.
“The balance of risks is therefore even more important to monitor in Europe. Our Governing Council on 12 September will, in my opinion, have to act accordingly: it would be fair and wise to decide on a further rate cut there,” the governor said.
