ECB will probably cut rates in Oct on risk of too low inflation: Villeroy
Repeats earlier item with no changes
FRANKFURT, Oct 7 (Reuters) -The European Central Bank will probably cut interest rates on Oct 17 as economic growth is weak and this raises the risk that inflation will undershoot its 2% target, French Central Bank Chief Francois Villeroy de Galhau told an Italian newspaper.
The ECB cut rates from record highs twice already this year and markets now expect even quicker policy easing with moves in October and December fully priced in as inflationary pressures are easing faster than policymakers had expected.
"Yes, quite probably," Villeroy told La Repubblica when asked if a cut is coming this month.
"In the last two years our main risk was to overshoot our 2% target," Villeroy was quoted on Monday as saying. "Now we must also pay attention to the opposite risk, of undershooting our objective due to a weak growth and a restrictive monetary policy for too long."
ECB President Christine Lagarde offered the strongest hint yet last week that an October rate cut is coming and policymakers have been lining up behind her since then.
Villeroy predicted further cuts in the 3.5% deposit rate next year and said the ECB should be back at the "neutral" rate, which neither slows, nor stimulates growth, sometime in 2025.
"If we are next year sustainably at 2% inflation, and with still a sluggish growth outlook in Europe, there won’t be any reason for our monetary policy to remain restrictive, and our rates to be above the neutral rate of interest," Villeroy said.
He did not estimate the neutral rate but said markets put it at around 2%, which would suggest six more cuts until then, including two more this year and four in 2025, if the ECB continued its practice of moving in 25 basis point increments.
While oil prices surged last week on turmoil in the Middle East, Villeroy said the ECB tended to look past such shocks, provided they were temporary and not feeding into underlying prices.
"The victory against inflation is in sight, but it’s not a reason to become complacent and relax on a preset course," Villeroy added.
Reporting by Balazs Koranyi; editing by Diane Craft
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
