The European Central Bank (ECB) recently made a bold move: they do not care what the Federal Reserve is doing. Yes, you heard that right! This is the public stance of François Villeroy de Galhau, a member of the ECB's Governing Council, in an interview with Ouest-France. He stated that the decisions made by the ECB under the leadership of Christine Lagarde are independent of the Federal Reserve's decisions. 'The decisions we make at the ECB with Christine Lagarde have nothing to do with the decisions of the Federal Reserve,' he said.

Do you remember June of this year? The ECB took the initiative to start cutting interest rates several months ahead of the Federal Reserve. This move is very 'European': emphasizing autonomy and decisive action.

Since June of this year, the ECB has cut rates three times! And it’s not over yet; they plan to continue lowering rates in the next four meetings. In contrast, the Federal Reserve only recently cut rates by 75 basis points and is still hesitating about whether to take further action in December. Ultimately, the Federal Reserve has to consider the international situation, while the ECB seems singularly focused and resolute on its path of rate cuts.

Villeroy revealed the source of the ECB's confidence: 'Price increases are lower than wage increases.' In plain language, this means that even if we loosen monetary policy, inflation won't immediately explode; there's enough room to maneuver. Moreover, he believes this round of rate cuts serves as a 'double insurance' to stabilize economic growth and maintain price stability.

In November, consumer prices in the Eurozone rose by 2.3%, with core inflation expected to reach 2.8%. Sounds a bit scary? But ECB officials have remained extremely calm, with some considering it a 'small case.' Yiannis Stournaras, the Governor of the Bank of Greece, frankly said: 'This is just a flash in the pan.' What he means is that these inflation figures may seem 'fierce,' but they are not expected to last long, with predictions that they could even fall below the 2% target by 2025.

Stournaras also mentioned: 'We will cut rates at every meeting until we reach the neutral rate (around 2%).' He even hinted that a 25-basis-point cut might happen directly in December, and he does not rule out the possibility of a 50-basis-point cut.

Now, the ECB not only has to deal with domestic inflation pressures but must also be wary of a 'transatlantic storm'—Trump may return! If Trump returns to the White House in January, his protectionist policies could drive up inflation in the U.S. while slowing global economic growth. Even more troubling for the EU is Trump's threat to impose tariffs on European goods, which would be a further blow to the already fragile Eurozone economy.

But that’s not all. The energy costs in Eurozone countries like Spain are continuously rising, becoming a major driver of inflation. This forces local economies to face both internal troubles (inflation) and external threats (tariff impacts).

The market has already bet that the ECB will cut rates again by a quarter of a percentage point in December. And rate-cut advocates like Stournaras even hope for a more aggressive approach. Vice President Luis de Guindos appears more cautious, acknowledging the necessity of rate cuts, but emphasizing the need to remain flexible, as global markets are still filled with uncertainties.

In the short term, the surge in wage growth in the Eurozone is also an unknown factor. Although analysts expect this trend to weaken next year, the current wage growth is intensifying inflation pressures, complicating the rate-cutting policy.

The ECB is undoubtedly one of the most decisive rate-cutting players among global central banks, but the challenges it faces are particularly complex. From internal wage pressures to external tariff threats, each step requires finding a delicate balance between 'easing' and 'caution.'

So, how will all this end? Perhaps only time will tell. However, it is certain that in the global economic chess game, the ECB has already indicated its 'distinctive stance.'

After reading the article, do you also feel that the ECB's actions are 'very strong'? In fact, this 'I have my independent attitude' is also very suitable for the investment market—following the trend is not the way; independent judgment is the path to victory! Want to know more exclusive insights into the global financial situation? Hurry up and follow me! Let’s navigate through the fog of the economy straight to the shores of wealth!

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