European Central Bank (ECB) Governing Council member and Bank of France Governor Francois Villeroy de Galhau indicated on Tuesday that there is still room for further interest rate cuts, with the ECB’s deposit rate potentially falling to 2% by the end of the summer.
Key Remarks:
Villeroy acknowledged the possibility of further easing but emphasized that the pace and extent of rate cuts remain open to assessment.
He noted that current market expectations suggest the ECB deposit rate could reach around 2% by the summer, which lasts from June to September in Europe.
Villeroy highlighted that an increase in long-term yields could lead to tighter financial conditions, which the ECB will factor into its monetary policy decisions.
Market Reaction: Following his comments, the EUR/USD pair rose 0.18% on the day, reaching 1.0787.
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