The French central bank president, François Villeroy de Galhau, believes that a further interest rate cut by the European Central Bank (ECB) at next week's meeting is possible. According to Villeroy, inflation in the eurozone will weaken further, and there is no significant risk of it being reignited by the trade war of US President Donald Trump.
The ECB will make a new interest rate decision next Thursday. Since June last year, the Frankfurt-based central bank has cut interest rates seven times by a quarter percentage point to support the struggling eurozone economy. The main interest rate now stands at 2.25%.
Villeroy also noted that Trump's import tariffs are likely to drive inflation in the US itself, as foreign products and goods could become more expensive. He added that interest rates in the eurozone are now significantly lower than those in the US.
ECB Vice President Luis de Guindos recently stated that he expects the central bank's inflation target to be reached in the coming months. The ECB aims for an inflation rate of 2%. Last month, inflation in the eurozone was 2.2%.
Financial markets are already anticipating a rate cut next week, likely by another quarter percentage point, with a further cut expected later this year.