The European Central Bank can further lower interest rates at a time of huge volatility in energy markets, according to one of its most influential rate-setters.
François Villeroy de Galhau, governor of the Banque de France, told the Financial Times that the bombing of Iranian nuclear facilities and the country’s response had not altered the underlying inflation outlook for now.
“If we look at the present assessment of markets so far, inflation expectations remain moderate,” he said, adding that the “significant appreciation of the euro” this year was partly offsetting the recent rise in oil prices. The governor was speaking before the oil price fell sharply late on Monday as US President Donald Trump said Israel and Iran had agreed to a ceasefire.