Spring signal for ECB rate cut

European Central Bank (ECB) officials continue to strongly guide interest rates to the spring months. The latest statement came from the French member. European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau said there was a general consensus among bank officials to start cutting interest rates in the spring. Villeroy, who is also the governor of the Bank of France, told Le Figaro that the risk of doing undue damage to the economy by waiting too long before easing monetary policy had become “at least equal” to the risk of moving too early and causing inflation to accelerate again. “Since our Governing Council meeting last week, there has been very broad agreement to cut rates in the spring, bearing in mind that the spring will last until June 21,” Villeroy said. Another ECB member, Robert Holzmann, warned that cutting rates before the Fed could cause a backlash from investors. “If the data is strong enough for the ECB to make its first rate cut, then that could happen, but not without the risk of market selling – especially if the Fed’s decision is linked to sudden big changes in inflation or employment data,” Holzmann said. “Europe is not the Fed’s 13th district, but what the Fed does is important.”