ECB Villeroy says falling inflation allows the Bank to lower interest rates

Villeroy heads up the Bank of France. He spoke with Ouest-France newspaper, commenting on wages and CPI:

• “Prices are increasing less quickly than wages on average — this also allows us to lower interest rates”

Villeroy stressed that the ECB reaches its interest rate policy decisions independent of the Federal Reserve:

• “The proof is that we had started to lower interest rates at the beginning of June, and the Fed only lowered them three months later. With the fall in inflation, we will be able to continue to lower rates.”

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The European Central Bank (ECB) is expected to cut rates at its next meeting, on December 12. 25bp is the expectation although weaker data has raised the prospect of a 50bp cut.

The Bank’s rate cut cycle so far:

This article was written by Eamonn Sheridan at www.forexlive.com.