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French Prime Minister François Bayrou has called on the European Central Bank (ECB) to accelerate interest rate cuts to support economic growth in the eurozone. In an interview with La Tribune Dimanche, Bayrou stressed that Europe must remain competitive with global superpowers like China and the U.S.
“The ECB must actively support economic activity in the eurozone. If it fails to cut rates faster, we will not be on equal footing with Chinese and American competition,” Bayrou said, marking a rare intervention by a French leader on monetary policy.
The ECB recently lowered interest rates by 25 basis points—the fifth cut since June—bringing the deposit rate down to 2.75%. However, borrowing costs remain significantly higher than pre-inflation levels, following price surges triggered by the Russia-Ukraine war. Higher interest rates have slowed economic activity, with France’s economy contracting by 0.1% in Q4 2024 and unemployment rising. Inflation in France has dropped below the ECB’s 2% target, while the eurozone inflation rate stands at 2.4%.
Economists argue that the ECB may be acting too slowly, as restrictive rates continue to weigh on businesses and consumers, even as Germany’s economy contracts and recession fears grow. Some believe the ECB is "behind the curve" in making necessary adjustments.
Meanwhile, Bayrou confirmed he would use special constitutional powers to pass France’s 2025 budget. The country entered the new year without a budget due to the previous government’s collapse.
As Europe faces economic headwinds, Bayrou’s call for faster rate cuts underscores growing concerns about the region’s competitiveness and financial stability.
