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The European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Thursday that the central bank should keep its options open for a bigger rate cut next month and its policy rate could eventually fall to a level that once again boots growth, per Reuters.   Key quotes Seen from today, there is every reason to cut on December 12. Optionality should remain open on the size of the cut, depending on incoming data, economic projections and our risk assessment.  Victory against inflation is in sight. The inflation target may be reached in early 2025. Our interest rates should clearly go to the neutral rate. We still have significant room to remove the restrictive stance of our monetary policy. I wouldn’t exclude going below the neutral rate in the future. There is every reason to cut on December 12th, optionality should remain open on the size. For the following meetings, we shouldn’t exclude any of them for possible cuts.  Market reaction At the time of writing, the EUR/USD pair is trading 0.04% higher on the day to trade at 1.0559.  ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. In extreme situations, the European Central Bank can enact a policy tool…

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Filed under: News - @ November 29, 2024 12:22 am