ECB’s Rehn: Reason to Continue Cutting Interest Rates in December

2 December 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Olli Rehn on Monday said that there were grounds for the ECB to lower borrowing costs further this month.

In a speech at an annual lunch meeting with EU Heads of Mission in Helsinki, Rehn, who heads the Bank of Finland, said the ECB’s monetary policy had been ‘rather effective’ in engineering disinflation and that ‘inflation has declined significantly and is now stabilizing to our target’.

Employment was still strong and growth still positive, though ‘sluggish, and the economic outlook has deteriorated in recent months’, he said.

Interest rates were still restrictive but clearly on the way down, he said.

‘Provided that incoming data and new macroeconomic projections confirm the current inflation and growth outlook, there is reason to continue rate cuts at the December meeting of the Governing Council’, he said.

European imports of defence goods and LNG from the US could be ‘one part of a positive solution for the potential trade negotiations, though Europe must avoid again creating unsustainable dependencies’, he said.