ECB to cut rates once inflation expectations settle at target- Villeroy

The European Central Bank will cut interest rates this year once it sees evidence inflation expectations have settled in line with its 2% target, ECB policymaker Francois Villeroy de Galhau said on Tuesday.

The European Central Bank will cut interest rates this year once it sees evidence inflation expectations have settled in line with its 2% target, ECB policymaker Francois Villeroy de Galhau said on Tuesday. Investors are betting that the ECB will carry out multiple rate cuts this year with the first move coming in March or April though some policymakers have indicated it could take longer to be certain inflation is under control.

Villeroy, who is also head of the French central bank, declined to give a timeframe in a News Year's address to the French financial sector, saying that the ECB's decisions would be guided by data and would not be rushed. "We will cut rates this year when inflation expectations are solidly anchored at 2% (with) effective and durable data," he said.

Euro zone inflation has been steadily declining, although it rose in December to 2.9% from 2.4% in November, mainly for technical factors like the end of government subsidies and low energy prices falling out of base figures used to calculate inflation rates.