The European Central Bank (ECB) is poised to continue easing interest rates in 2025, with policymakers expressing comfort with the financial markets’ projections for future rates, according to ECB policymaker and Bank of France Governor Francois Villeroy de Galhau.
In an interview on Friday, Villeroy confirmed, “There will be further rate cuts next year,” but clarified that the ECB is not committed to a specific rate trajectory. He noted, “We are collectively rather comfortable with the financial markets’ interest rate forecasts for next year.”
The ECB’s latest move came on Thursday when it implemented its fourth interest rate cut of the year, reducing rates by 25 basis points. This brings the ECB’s deposit rate—the key benchmark for borrowing costs across the 20-nation eurozone—to 3%.
The central bank also removed a reference in its guidance to maintaining sufficiently restrictive rates, a move economists interpret as a signal that more rate cuts are likely in the near future, potentially as soon as January. Analysts suggest that with inflation expected to stabilize at the ECB’s target of 2% in early 2025, further monetary easing may be necessary to support economic growth in the face of ongoing political instability within the eurozone and the looming threat of a U.S. trade war.
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