PARIS — The European Central Bank (ECB) has “every reason” to cut its benchmark interest rate at its next meeting on Dec. 12, Governing Council member Francois Villeroy de Galhau of France said on Thursday.
Economists have been keenly awaiting the central bank’s next move as the European economy sputters even as policymakers try to rein in inflation.
“Seen from today, there is every reason to cut on December 12,” Villeroy de Galhau, also governor of the Bank of France, told the Euro 50 Group, a think tank of economists, bankers and public officials.
He did not indicate how big a cut could be on the cards, saying that “optionality should remain open on the size of the cut, depending on incoming data, economic projections and our risk assessment.”
Currently, the key ECB rate stands at 3.25 percent, and analysts are divided over whether a potential December cut will be 50 basis points or 25 points.
The bank has cut its rates three times since June, hoping to promote economic growth after hiking rates to rein in inflation that soared following the Covid-19 pandemic and Russia’s invasion of Ukraine.
“According to the latest actual inflation data, the euro area could be sustainably at two percent inflation already in early 2025,” Villeroy de Galhau said.
He added, however, that “the European economy is achieving a soft landing, but a takeoff is not yet in sight.”
His comments came as Germany reported Thursday that inflation in Europe’s biggest economy rose to 2.2 percent in November, above the ECB’s target of 2 percent.
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