French Prime Minister Calls for Aggressive ECB Rate Cuts

French Prime Minister Francois Bayrou urged the European Central Bank to cut interest rates more aggressively to drive economic growth, warning of competition from China and America. He highlighted the need for lower borrowing costs as inflation stabilizes, stressing that Europe needs to compete on equal terms worldwide.

French Prime Minister Francois Bayrou has called on the European Central Bank to expedite interest rate cuts to foster economic growth in Europe, especially as inflation normalizes. He emphasized that timely action is vital for Europe to remain competitive against global economic powers such as China and the United States.

Bayrou's remarks, made in an interview with La Tribune Dimanche, come in the wake of the ECB reducing interest rates by 25 basis points—the fifth such cut since June. However, he noted that the current rates, despite recent reductions, remain higher than prior to the inflation surge triggered by the conflict in Ukraine and soaring energy prices.

The French economy has shown signs of contraction, with unemployment on the rise and inflation now below the ECB's target. Some economists question whether the ECB is acting swiftly enough, as growth remains restrained across the Eurozone. Bayrou confirmed plans to employ constitutional powers to enforce the French budget, addressing governmental inertia from the previous administration's collapse.

(With inputs from agencies.)