ECB's Villeroy: We will remain pragmatic on rates according to data flow and be as agile as necessary.

ECB's Villeroy: We will remain pragmatic on rates according to data flow and be as agile as necessary.

ECB's Villeroy de Galhau recently stated that the European Central Bank (ECB) has won the battle against inflation in Europe. The Banque de France governor emphasized that the ECB has the tools to react if deflation becomes an issue. He also indicated that the ECB will not revert to the low interest rates seen a few years ago. Villeroy's comments come as the ECB prepares for its June policy meeting, where it is expected to make further adjustments to its interest rates.

At the recent press conference, ECB President Christine Lagarde stated that the ECB has nearly concluded its current cycle of interest rate cuts. This shift in policy is seen as a positive sign for the Euro, which has been bolstered by global diversification trends away from the U.S. and the Dollar. The Euro has gained strength against the Pound and the Dollar, with analysts predicting further appreciation.

Villeroy's comments echoed a similar sentiment from Bank of France Governor François Villeroy de Galhau, who declared victory over inflation in France and the eurozone. He noted that annual inflation in France was currently under 1% and forecasted 2% for the eurozone in 2025. The ECB's desire to halt rate cuts comes as the Euro finds demand from global diversification trends away from the U.S. and the Dollar.

The ECB's more hawkish tone is seen as a positive development for the Euro. Analysts expect the ECB to pause in July and deliver a final rate cut in September, leaving the deposit rate at 1.75% for the remainder of 2025 and throughout 2026. This pause in the rate-cutting cycle will allow other central banks that continue to cut to close an interest rate differential that has historically weighed on the Euro.

The ECB's desire to halt cutting interest rates comes as the Euro finds demand from global diversification trends away from the U.S. and the Dollar. The Euro has gained strength against the Pound and the Dollar, with analysts predicting further appreciation. The ECB's more hawkish tone is seen as a positive development for the Euro.

The ECB's decision to remain pragmatic on rates according to data flow and be as agile as necessary is a strategic move to maintain stability in the eurozone economy. The ECB's ability to react to inflation and deflation threats ensures that the Euro remains a stable and attractive currency for investors.

References:
[1] https://www.tradingview.com/news/forexlive:23fd2b402094b:0-ecb-s-villeroy-we-have-won-battle-against-inflation-in-europe/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_S8N3QS0GI:0-ecb-s-villeroy-france-should-stabilise-public-spending-focus-on-the-wealthy-first/
[3] https://uk.investing.com/news/forex-news/euros-positive-bias-bolstered-by-the-ecb-and-flows-4122735
[4] https://www.fxstreet.com/news/ecbs-villeroy-we-have-won-battle-against-inflation-in-europe-202506060558
[5] https://www.centralbanking.com/central-banks/monetary-policy/7973035/banque-de-france-governor-declares-victory-over-inflation