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Investing.com -- European Central Bank policymaker Francois Villeroy de Galhau indicated Thursday that if the ECB makes any interest rate moves in the next six months, a cut is the most likely outcome.
"Barring a major exogenous shock, including possible new military developments in the Middle East, if monetary policy were to move in the next six months, it could be more in the direction of accommodation," Villeroy said during a speech at the European University Institute in Italy.
The statement comes after the ECB paused its policy easing this month despite projections showing inflation temporarily falling below its 2% target. This dip is attributed to the strong euro and low oil prices, which has raised concerns about a possible return to the pre-pandemic decade’s ultra-low inflation environment.
Villeroy, who also serves as governor of the Bank of France, stated that the ECB would watch for any signs that energy prices might affect underlying inflation and broader price expectations. He noted that such developments could lead the central bank to adjust its monetary policy.
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