ECB officials expect further interest rate cuts, Villeroy supports market views.
Several officials from the European Central Bank have indicated that more interest rate cuts are on the horizon. The Governor of the Bank of France, Francois Villeroy de Galhau, stated that it seems reasonable for investors to bet on cumulative cuts exceeding 100 basis points. "There will be more cuts next year, and multiple cuts at that," he said on Friday. "Although the central bank has not committed to a specific interest rate path in advance, predictions for the financial markets seem quite reassuring." The interest rate swap market reflects a total expected cut of about 120 basis points by the end of next year. Insiders have revealed that the European Central Bank plans to cut rates by 25 basis points in January and possibly in March.
The economic outlook is bleak, and European Central Bank officials have collectively adopted a dovish stance to reassure the market that interest rates will be cut by more than 100 basis points next year!
ECB Governing Council member De Gallo stated that the European Central Bank will further reduce borrowing costs in 2025, and investors' bets on a rate cut of over 100 basis points seem reasonable.
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