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ECB’s Rehn says speed, scale of rate cuts to be decided at each meeting
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HELSINKI (Reuters) – Finnish ECB policymaker Olli Rehn said on Tuesday that euro area inflation is more clearly stabilising at the European Central Bank’s 2% target, and that this helps set the stage for further interest rate reduction.
“The direction of our monetary policy is now clear,” ECB Governing Council member Rehn said in a statement from the Bank of Finland, where he is the governor.
“The speed and scale of the rate cuts will be determined in each meeting on the basis of incoming data and comprehensive analysis,” Rehn said.
Uncertainty over trade policy is weighing on the near term economic outlook, and the risks are on the downside, but Europe must be prepared to face trade conflict with the United States, he added.
“Negotiation is preferable, and the EU’s negotiating position can be strengthened by demonstrating in advance that it is ready to take countermeasures if the United States threatens Europe with higher tariffs,” Rehn said.
Finland’s own return to economic growth will be slow in 2025 burdened by the uncertain outlook of the world economy, the Finnish central bank said, while reiterating a forecast for a shrinking economy in 2024.
The Bank of Finland kept its 2024 gross domestic product (GDP) estimate unchanged for a 0.5% contraction, and revised down its GDP growth projection for 2025 to 1% from 1.1% seen in September.
(Reporting by Essi Lehto, editing by Terje Solsvik)
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to influence economic activity, aiming to achieve macroeconomic objectives such as controlling inflation and fostering economic growth.
Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power. It is typically measured as an annual percentage increase.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the total amount borrowed or saved. They are influenced by monetary policy and economic conditions.
Economic growth refers to an increase in the production of goods and services in an economy over a period of time, typically measured by the growth rate of real GDP.
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