ECB’s Rehn: If June Forecasts Confirm Return to 2%, Would Be Proper to Cut Rates Again

24 April 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Olli Rehn on Thursday said that the ECB should cut rates in June if the latest projections showed the inflation target being reached.

In remarks at the Reinventing Bretton Woods conference on the margins of the spring meetings of the IMF and World Bank, Rehn, who heads the Bank of Finland, said, ‘Good news from Europe is that inflation in the euro area is stabilising at the ECB’s 2% target. Disinflation is well on track.’

While US tariffs would boost inflation there, in Europe the increase in some prices would be offset by slower overall growth, he said. Moreover, he noted, the euro has strengthened, confounding expectations.

At the Governing Council’s June 5 policy meeting, if the updated forecasts indicate medium-term price stability, ‘in my view the right reaction in monetary policy would be to cut rates further, in line with our strategy’, he said.

‘But that depends on data and our assessment’, he continued. ‘Under pervasive uncertainty today, the Governing Council maintains full freedom of action in monetary policy. In any case, we will adjust our rates to bring inflation to 2% in the medium term – just as our strategy tells us to do.’