ECB/Villeroy: There's Room to Lower Interest Rates Further

In a recent statement, Francois Villeroy de Galhau, the Governor of the Bank of France and a member of the ECB Governing Council, identified U.S. policies as one of the most significant challenges facing the global economy, highlighting the likelihood of protective measures under the new Trump administration.

In an exclusive interview with Asahi Shimbun, he stated, "A stronger protectionism could increase risks. If you look at economic history, almost everyone agrees that, at least in the long term, protectionism is a bad thing."

Discussing the world economy, Villeroy de Galhau noted, "Two years ago, everyone was afraid of recession and prolonged inflation, and we have overcome both."

He cautioned against protectionism, which he argued triggers inflation, reduces consumption, and diminishes the power of innovation. He emphasized the importance of close coordination among the Group of Seven countries, which include the United States, Japan, and European nations. "We need to maintain an economic dialogue because there are many issues that fall within our common interests," he stated.

Villeroy pointed out that monetary policy has played "an important role in the victory over inflation" and suggested that there is "likely room to further lower interest rates" to stimulate the economy.