ECB’s Rehn: Inflation and Growth Both Support Looser Policy: Case for April Cut Clearly Stronger

9 April 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Olli Rehn on Wednesday called for further monetary accommodation in light of the improved inflation outlook and weaker growth prospects in the euro area.

In a speech at the OP Cooperative's Annual General Meeting, Rehn, who heads the Bank of Finland, said there were ‘two pieces of good news for the Eurozone economy’ in that the labour market situation was still strong and inflation in the area was converging towards 2%, also thanks to the circumstance that ‘wage inflation has largely calmed down.’

The US tariffs were unlikely to change the inflation outlook much, with only an ‘apparently modest’ impact, he said.

‘Stabilising inflation and weakening growth have combined to argue for an easing of the ECB’s monetary policy’, he said.

Policymakers had ‘full discretion’ about their decision, especially under the extremely uncertain economic prospects, he said.

‘Since the March meeting, many of the risks identified at that time have now either materialised or are materialising’, he said. ‘The overall growth outlook for the euro area is now weaker than what was assessed at the March meeting.’

As a result, he said, ‘I believe the case for further rate cuts at the April meeting has clearly strengthened.’

Rehn said he had already been of this opinion, but that the last week had strengthened his conviction, ‘as inflation appears to be stabilising towards target and the growth outlook has further weakened as a result of the trade war.’