ECB’s Rehn: ‘Rate Cuts Support a Gradual Strengthening of Growth’

2 September 2025

ECB’s Rehn: ‘Rate Cuts Support a Gradual Strengthening of Growth’
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 Tuesday that downside risks to inflation should not be minimized.

In a presentation about the European and Finnish economic outlook and monetary policy at the Finnish government budget meeting, Rehn, who heads the Bank of Finland, said that European economic growth had been better than expected in H1 2025.

"Interest rate cuts support a gradual strengthening of growth," he said, according to the slides made available by the Bank of Finland. "Uncertainty and tariffs weigh on growth prospects."

Downside risks to growth were anticipated towards the end of the year, according to Rehn.

Services inflation and wages were "close to target" and downside risks to inflation "should not be underestimated," he said.

He attributed these risks to subdued energy prices, a stronger euro, potential growth headwinds from trade tensions, and weaker core inflation.

Despite markets currently pricing in less than one more rate cut in 2025-26, Rehn said that the June projections included one more rate reduction this year.

 

Related articles: