ECB/Villeroy: There is still room to further lower interest rates.

Francois Villeroy de Galhau, a member of the ECB and President of the Bank of France, stated that there is still room to further lower European Central Bank (ECB) interest rates, with the deposit rate, currently at 2.5%, potentially dropping to 2% by the end of summer. Speaking to the Frankfurter Allgemeine Zeitung, Villeroy expressed confidence in the possibility of more easing, noting that markets expect an ECB interest rate around 2% during the summer months.

Additionally, ECB board member Piero Cipollone and Bank of Greece Governor Yannis Stournaras have recently strengthened market bets for an interest rate cut in April by advocating for further policy easing. However, figures like Gabriel Makhlouf from Ireland and Peter Kazimir from Slovakia have adopted a more cautious stance. Villeroy highlighted that rising long-term yields, particularly in Germany, could tighten financing conditions, partially reversing past efforts to lower borrowing costs.