MNI BRIEF: ECB's Villeroy Says Still Room For Cuts

The ECB still has scope to further ease interest rates as tariffs should not have a significant inflationary impact on the euro area, Bank of France Governor Francois Villeroy said on Tuesday.

The ECB's current easing cycle is neither "finished nor automatic", Villeroy told the Frankfurter Allgemeine Zeitung.

"As tariffs should not have a significant inflationary effect in the euro area - much less than in the U.S. - I believe there is still scope for further easing. However, the pace and extent remain open."

Villeroy said the ECB would make rate decisions based on an "agile pragmatism", reviewing data but acting swiftly in response. 

"Seen from today, markets expect an ECB interest rate of around 2% in the summer. It is a possible scenario, considering that summer in Europe lasts from June till September,” he said.

"There is a solid trend towards disinflation in Europe.” (See MNI ECB WATCH: Cuts 25BP, Direction No Longer Clear)