HELSINKI (Reuters) – Finnish ECB policymaker Olli Rehn said on Tuesday that euro area inflation is more clearly stabilising at the European Central Bank’s 2% target, and that this helps set the stage for further interest rate reduction.
“The direction of our monetary policy is now clear,” ECB Governing Council member Rehn said in a statement from the Bank of Finland, where he is the governor.
“The speed and scale of the rate cuts will be determined in each meeting on the basis of incoming data and comprehensive analysis,” Rehn said.
Uncertainty over trade policy is weighing on the near term economic outlook, and the risks are on the downside, but Europe must be prepared to face trade conflict with the United States, he added.
“Negotiation is preferable, and the EU’s negotiating position can be strengthened by demonstrating in advance that it is ready to take countermeasures if the United States threatens Europe with higher tariffs,” Rehn said.
Finland’s own return to economic growth will be slow in 2025 burdened by the uncertain outlook of the world economy, the Finnish central bank said, while reiterating a forecast for a shrinking economy in 2024.
The Bank of Finland kept its 2024 gross domestic product (GDP) estimate unchanged for a 0.5% contraction, and revised down its GDP growth projection for 2025 to 1% from 1.1% seen in September.
(Reporting by Essi Lehto, editing by Terje Solsvik)
