ECB’s Villeroy says market expectations for future ECB rate cuts ‘reasonable’ By Reuters

PARIS (Reuters) – Market expectations for the path of future interest rate cuts by the European Central Bank are “rather reasonable,” ECB policymaker Francois Villeroy de Galhau said in an interview on French radio BFM Business on Friday.

The ECB kept interest rates unchanged on Thursday, as expected, but said September’s meeting was “wide open”.

“Market expectations for the path of interest rates seem rather reasonable to me at the moment,” Villeroy said when asked if he agreed with expectations of a potential cut in September and another one in December.

Markets are pricing in almost two ECB rate cuts for the rest of the year and roughly five moves by the end of next year, a view no policymaker has openly challenged for weeks.

“Overall, we are on track with our inflation target and forecast of 2% next year,” Villeroy said. “I’m even going to say this morning that, barring any shocks, this is more than a forecast, it’s a commitment.”