ECB Governing Council Member: Eurozone Inflation Is on a Downward Trend, There Is Still Room for Interest Rate Cut

Francois Villeroy de Galhau, a member of the European Central Bank (ECB) Governing Council and Governor of the Bank of France, said on Monday (April 27) that the tariff threats from US President Donald Trump had brought uncertainty to economies around the globe, but with inflation in the eurozone declining, there was still room for further interest rate cuts in Europe.

In an interview, Villeroy pointed out, "We are in a moment of great uncertainty... The policies of the Trump administration are not good for the US economy and, unfortunately, not good for the world economy either."

He also added, "Protectionism doesn't work. It means slower growth and higher inflation."

Villeroy reiterated that with inflation continuing to decline, he did not believe there was a risk of recession in Europe, and stated, "We still have room for gradual interest rate cuts."

At the recent Spring Meetings organized by the International Monetary Fund and the World Bank, ECB policymakers expressed growing confidence in a June interest rate cut by the ECB.

Data from the eurozone showed that business growth in the region had stalled this month, wage growth had slowed significantly, and inflation in Europe had continued to decline, creating conditions for an interest rate cut.

Despite the growing confidence within the ECB for a June interest rate cut, officials are not prepared to make a significant cut, believing that a 50-basis-point cut would trigger unnecessary market speculation.

They also emphasized that they remained open to a June interest rate cut, as there was still more than a month before the policy meeting, and Trump's erratic policy stance made the economic future difficult to predict.