ECB’s Rehn: Should Cut Rates in June if Projections Show Weaker Growth and Disinflation

9 May 2025

ECB’s Rehn: Should Cut Rates in June if Projections Show Weaker Growth and Disinflation
Olli Rehn, governor of the Bank of Finland, at the European Central Bank Forum on Central Banking in Sintra, Portugal on July 2, 2024. Photo by the ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Olli Rehn said on Friday that a confirmation of ongoing disinflation and weaker growth in the ECB's June projections would argue for another rate cut.

In the Q&A session after a speech at the European Day Conference hosted by the Bank of Finland, which he heads, Rehn said that ‘there are several issues in the field of the inflation outlook which in fact imply a downward short-term trend in inflation’.

A higher euro, lower energy prices and trade tensions suggested a weaker outlook for growth and inflation, according to Rehn.

Were disinflation and weaker growth to be confirmed in the June forecast, ‘then in my view in order to achieve our 2% symmetric inflation target over the medium term, the right reaction in monetary policy is to cut rates’, he said.

The ECB had to remain data-dependent and stick to its meeting-by-meeting approach, he said.

 

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