The central bank is likely to cut interest rates on October 17

European Central Bank (ECB) Member of the Governing Council and President of the Bank of France, François Villeroy de Galhau, said in an interview with La Repubblica on Monday that the ECB will likely cut interest rates on October 17.

Key quotes

“Over the past two years, our main risk has been exceeding our 2% target.”

“Now we also need to be mindful of the opposite risk, of overshooting our target due to weak growth and tight monetary policy for too long.”

“If we are sustainable at 2% inflation next year and with growth prospects still sluggish in Europe, there will be no reason for our monetary policy to remain tight and our rates to be above the neutral rate.”

“Victory against inflation is in sight, but it is no reason to become complacent and relax on a set course.”

Market reaction

EUR/USD is off highs after mixed eurozone retail sales data, currently trading 0.13% lower on the day at 1.0961.