According to François Villeroy de Galhau, a member of the ECB’s Governing Council, rates will be cut at some point in 2024 after remaining at current levels for a period long enough to ensure that inflation is defeated.
“Between the rate increase, which, barring any surprises, has ended, and the cut, which is expected to happen in 2024, there is a plateau,” Villeroy said. This “patience” strategy is seen as a key element in avoiding falling into the inflation trap again.
Villeroy, who also serves as Governor of the Bank of France, said that the decision to cut rates by the ECB will be based on the economic data available and will be taken autonomously, regardless of the moves of the US Federal Reserve.
“The remedy is effective, not always pleasant, but being on the road to beating inflation is great news for the French, for purchasing power and for economic growth,” concluded Villeroy. With these words, the Governor highlights the importance of this strategy to ensure robust and sustainable economic growth for the future.