Concerns about inflation risks in the eurozone have eased, but the ECB is ready to respond quickly to new data, said Francois Villeroy de Galo, governor of the Bank of France and a member of the ECB Governing Council. He stressed that since last year he adheres to the principle of «flexible pragmatism», which is relevant both for the March meeting and for the recent decision of the regulator. De Galo assesses the risks of accelerating inflation as weak, noting a possible further slowdown in consumer price growth due to the strengthening of the euro, lower commodity prices and active imports to the eurozone, including from China. On Thursday, the ECB cut all three main interest rates by 25 basis points, while the wording about the «restrictive» rate level was missing from the press release. It is also noted that the impact of the new US tariffs on inflation in the region is still unclear and will become clear over time. Earlier, de Galo indicated that the neutral level of the deposit rate for the eurozone, which does not stimulate or limit economic growth, is about 2%, whereas now the rate is 2.25%.
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