ECB’s Rehn: We Should Cut in April if Data Verify the Baseline, Pause Otherwise

1 April 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Olli Rehn said on Tuesday that if available data were consistent with the central scenario, the ECB should cut in the April meeting.

In an interview with Politico, Rehn, who heads the Bank of Finland, said that ‘[i]f the March baseline forecast were to materialise, it would imply there is some room for rate cuts.’

The main developments since the March meeting had to do with US tariffs and higher defence spending in Europe, he said.

‘If you look at the impact of these two factors, they may create both upside and downside risks to inflation’, he said.

Despite the positive impact of higher defence spending on GDP in the medium term, risks were still mainly tilted to the downside with respect to economic activity, according to Rehn.

‘In my view, if the data verify the baseline and indicate that to reach our goal of 2% symmetric inflation target over the medium term, the right reaction in monetary policy should be to cut in April, we should indeed do so’, he said.

‘But if data indicate something else, then we would pause’, he added.

It was important that the ECB retain its freedom to make any decision and not pre-commit, he said, given the ‘pervasive uncertainty’.

Asked if the ECB should stop cutting rates once at neutral territory around 2% or move towards a more accommodative stance, Rehn said that it depended on the extent to which price stability was expected to be reached and on the materialisation of risks on the trade front.

‘It's important that the European Union prepares proportionate countermeasures to improve its negotiating position with the aim of negotiating a solution which is better for everybody’, said Rehn with regards to potential retaliatory measures against US tariffs.