MNI BRIEF: ECB Villeroy: Cut At Coming Meets Totally Possible

It is "totally possible" that the ECB will cut rates at one of its upcoming policy meetings, Bank of France Governor Francois Villeroy told BFM Business TV Friday.  (SEE CORRECTED: MNI ECB WATCH: Lagarde Declares Disinflation Over )

The BdF chief said that markets had slightly overinterpreted the term 'restrictive' in their reactions to the ECB's statement Thursday following the latest Governing Council meeting.  (see MNI SOURCES: Markets Overplaying ECB's Hawkish Shift )

Villeroy said that several officials, including himself, had stressed two downside risks to inflation at the meeting, noting that the euro has appreciated by three cents against the U.S. dollar since June. He said that the rise of the euro would mean at least a 0.1 percentage point reduction for inflation. The second major downside risk to inflation was the increase in low-price Chinese imports, he said, which have increased by 12% over the past year, according to Bank of France data.  (see MNI SOURCES: Data-Led ECB To Hold A Cut In Reserve If Needed )

Villeroy refrained from commenting much on the ongoing political difficulties around the French 2026 budget proposal, saying only that "France must deal with its budget problem and the sooner the better."