European Central Bank Committee: It is feasible to cut interest rates at every meeting, with summer rates expected to drop to 2%.

The European Central Bank's Management Committee member and Governor of the French Central Bank, Francois Villeroy de Galhau, stated that the European Central Bank may lower interest rates at each upcoming meeting. In an interview, Villeroy stated that despite threats from President Trump to impose trade tariffs, officials are still working to bring the inflation rate back to 2% as planned. He mentioned that this could lead to a decrease in deposit rates from the current 3% to 2% in the summer. Villeroy said on Tuesday, "Our consensus is that we will continue to take action at each meeting, and since September, we have successfully implemented this approach." Investors are betting that the European Central Bank will lower borrowing costs four times in 2025, inflation will stabilize at the target level in the coming months, and the eurozone economy needs a boost due to political turmoil in Germany and France. Villeroy's views were echoed by the prominent hawkish figure, Peter Kazimir, Governor of the Slovak Central Bank. He stated that consecutive rate cuts of three to four times are "feasible," but emphasized the need to remain flexible to respond to new data. Villeroy also downplayed the possibility of rate cuts exceeding a quarter of a percentage point in this cycle. "If we are decisive enough in cutting rates now, we will not need to increase the cutting pace, which might become another debate," he said. "I do not rule out this possibility in the future, but this is what I call agile pragmatism, we should be prepared to take action." Regarding the so-called neutral interest rate (an unobservable level that neither stimulates nor restricts economic activity), the French official stated that he expects the neutral interest rate to be 2%, but added that there is no need to discuss lowering rates below that level at this time.