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Reuters
6 days ago
- Business
- Reuters
ECB's Villeroy: normalisation of interest rates in euro zone probably not complete
PARIS, May 27 (Reuters) - The normalisation of interest rates in the euro zone is probably not complete, European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Tuesday. "This normalisation is probably not complete, and we are likely to see this at our governing council next week," Villeroy - who is also head of the Bank of France - said in a speech. The ECB's governing council, which sets monetary policy for the euro area, is scheduled to meet on June 5, with financial markets expecting that it would lower its key deposit facility rate to 2.00% from 2.25%. Such a move would mark the ECB's eighth rate cut in a row, reflecting concerns about subdued economic activity and the taming of inflation. "The French inflation figure for May, published just this morning at the low level of 0.6%, is yet another very encouraging sign of disinflation in action," Villeroy said.
Business Recorder
16-05-2025
- Business
- Business Recorder
ECB's Villeroy: Volatility reflects trade wars, not currency wars
PARIS: European Central Bank policymaker Francois Villeroy de Galhau said economic and market volatility reflected trade wars rather than currency wars. 'Unfortunately, there is a risk of trade war, but a currency war would be a situation where each country is actively using its interest rates to try and gain an economic advantage. We are not at that point right now,' Villeroy, who also heads the Bank of France, told regional French newspapers in an interview published on Friday. ECB to stand by past stimulus policies in strategy review 'The current currency moves are more of a reflection on revisions to economic forecasts,' added Villeroy, who is also head of the Bank of France.
Euronews
15-04-2025
- Business
- Euronews
France's united front against Mercosur deal starts to show cracks
ADVERTISEMENT France's strong resistance to the Mercosur agreement is beginning to crack in response to concerns over potential restrictions on EU exports to the US. 'Existing and future trade agreements between the EU and other economies (JEFTA [the free trade agreement with Japan], CETA [the free trade agreement with Canada], the free trade agreement Mercosur‑EU) could further cushion tariff shocks linked to US trade policy,' Bank of France's Governor, François Villeroy de Galhau, said in his annual letter to French President Emmanuel Macron on 9 April. In December the European Commission concluded a political agreement with the Mercosur countries - Argentina, Brazil, Paraguay and Uruguay - to establish one of the world's biggest free trade zones, encompassing 750 million people and about one-fifth of the global economy. The agreement now needs approval from EU countries before it enters into force. France has long been opposed to the agreement. In particular, it denounced what it claimed would result in unfair competition for its farmers, calling for so-called 'mirror clauses' to be introduced in the deal, so that agricultural imports coming from the Mercosur meet the same production standards existing for EU farmers. MEP Marie-Pierre Vedrenne (France/Renew), a prominent critic of the Mercosur agreement during the previous legislative term and former chair of the Trade Committee, has adopted a more measured tone recently. 'I do hold a personal conviction: remaining opposed to this agreement on principle alone doesn't seem reasonable to me,' she told Euronews. Officially, France maintains that it is mindful of the evolving global trade context, but its position on the Mercosur agreement remains unchanged. Paris continues to reject the deal. 'The French position has not changed, but the context has and we take it into account,' a French diplomat told Euronews, 'The context is now in favour of the Mercosur agreement, and the Latin American countries are also looking for opportunities as the US market is closing. This must lead us to be ambitious in terms of protecting the environment and our farmers.' This stance was echoed by another French official. The imminent arrival of Friedrich Merz as Germany Chancellor, and renewed EU impetus to diversify global trade partnerships in response to rising US protectionism, has intensified pressure on France and other member states opposing the EU-Mercosur agreement. 'The Mercosur free trade agreement with the four South American countries must come into force quickly,' Merz told German media Handelsblatt on 13 April. Among the countries opposed to the deal, Ireland, keen to protect its farmers, said on 9 April through its Minister for Trade that it would maintain its opposition, and Austria remains opposed, while the Netherlands and Poland are critics of the deal. Italy remains in favour of the agreement, though it wants impact on agriculture to be taken into account in the final text. On Monday, a Commission spokesperson said that the EU executive was not planning to make any changes to the text. The document that the member states will have to approve will be sent to them before the end of the summer, the Commission added. In the meantime, uncertainty surrounding President Donald Trump's ongoing tariff war leaves open the possibility that EU critics of the Mercosur deal may reconsider their stance.
Yahoo
10-04-2025
- Business
- Yahoo
Trump U-turn may have saved stocks, but ECB council member says U.S. is killing world confidence in the Dollar: ‘Thank God Europe created the Euro'
Donald Trump's dramatic Wednesday U-turn on tariffs was a predictably unpredictable move from the U.S. president that set U.S. stocks up for their best day since 2008. But, while equities were pulled out of the firing line, the head of France's central bank isn't sure the rest of the world will continue to buy whatever Trump and the U.S. are selling. On Tuesday, Trump announced a 90-day pause to tariffs leveled against several countries on April 2's 'Liberation Day,' relenting on his grand plans as equity and bond markets fell into bear market territory. China, however, was hit with increased import tariffs of 125%. Speaking on France Inter radio, Bank of France chief and ECB policymaker Francois Villeroy de Galhau warned Trump that his maneuvers hadn't gone unnoticed by global investors. And while equity and bond markets lick their wounds in preparation for the next bend in the roller coaster, the biggest victim in the long run could be the U.S. Dollar. "The big element of constancy in US policy of the past decades is the attachment to the central role of the dollar. I believe that the Trump administration also has that view, but it is very incoherent in the way it practices that. What has happened in recent days and weeks plays against the confidence in the US currency," Villeroy said. The U.S. Dollar is the world's reserve currency, thanks to its dominance as a currency for global transactions and as reserves for central banks. That mantle started to be questioned after Trump put pressure on Ukraine and Europe to defend themselves against the threat of Russian overreach, threatening to pull out of NATO. As the influence of China grows, some investors fear the U.S. turning its back on its allies could accelerate 'de-dollarization' efforts. Villeroy's comments are reflective of a wider investment sentiment around the U.S., for so long regarded as the protector of the Western international order and more importantly, a reliably stable location for the flow of capital. As Fortune's Shawn Tully reported in the wake of Trump's tariff pause, the president appears to have been moved into action by rapidly accelerating bond yields from April 5. The 10-year Treasury bond, a key debt metric used to set things like car loans and mortgage rates, began to rise after initial signs of a dip linked to expectant interest rate cuts. The reason behind the rise in bond yields, economists told Tully, was that tariffs appeared to shatter investors' perception of the U.S. as a welcoming and lucrative destination for foreigners to plant their money. Meanwhile, a slowdown in global trade would by definition reduce global demand for the Dollar through lower transactions. Trump himself has publicly stated his intention to weaken the Dollar hoping it will improve U.S. export competitiveness. Combined with lower confidence in U.S. assets, Trump's economic agenda could very well achieve his aim. While Villeroy denigrated the appeal of the U.S. Dollar in the wake of a fraught geopolitical climate, the ECB policymaker was keen to talk up the pros of the European alternative. "Thank God that Europe, 25 years ago, created the Euro. We have created our own monetary autonomy, we can manage our interest rates in a way that is different from the Americans, that was not the case before," he said on France Inter. The Euro's introduction in 1999 set the Eurozone currency up for a battle with the greenback for global dominance. It hasn't quite played out that way, with the Eurozone's debt crisis causing the currency to lose track against the Dollar. However, Trump's isolationism push has worked in the Euro's favor. The currency has risen in value against the Dollar since Trump's inauguration. In its quest to dethrone the Dollar, however, the Eurozone's currency will face challengers. The BRICS nations have a yearslong head start in 'de-dollarization,' taking more opportunities to use alternative currencies in cross-border transactions. While the U.S.'s dominance leaves it with plenty of headroom for disruption, more weeks like the one that followed Trump's tariff yo-yo could help the Euro compete. This story was originally featured on
Reuters
09-04-2025
- Business
- Reuters
France freezes 5 bln euros of public spending
PARIS, April 9 (Reuters) - France is freezing 5 billion euros ($5.5 billion) of public spending to keep its deficit reduction plans within reach amid slowing growth and uncertainty due to U.S President Donald Trump's tariffs, said budget minister Amelie de Montchalin. The French government aims to cut its public sector budget deficit to 5.4% of economic output this year from 5.8% in 2024, but the increasingly uncertain growth outlook is making that challenging. "Just as a household sets aside money for difficult days ahead, today I can say that we are giving ourselves 5 billion from extra efforts, via spending that will not be carried out, spending that will be pushed back, spending that will be re-allocated," Montchalin told BFM TV. "And those 5 billion that we are going to either cancel, delay or re-direct, that will be our response to this unstable world," she added. Finance Minister Eric Lombard opened the door on Friday to letting deficit reduction target slip this year if the trade war hits the economy hard, ruling out extra spending cuts to offset a potential shortfall in growth. Bank of France Governor Francois Villeroy de Galhau said that France should stick to the current deficit target, adding that any slippage would have to be made up for later. The government is due to update its long-term growth and deficit forecasts next week when it sends its annual economic planning programme to the European Commission. "Whatever happens, the right path to take is the one of debt-cutting," Montchalin said. ($1 = 0.9042 euros)
