Latest news with #OlliRehn
Reuters
5 days ago
- Business
- Reuters
ECB policymakers debate risk of inflation going too low
FRANKFURT, June 6 (Reuters) - European Central Bank policymakers hailed victory over runaway inflation on Friday even as some warned that it was now at risk of going too low, rekindling memories of anaemic price growth in the pre-pandemic decade. The ECB cut interest rates on Thursday for the eighth time in the past year and signalled at least a pause in policy easing next month since inflation was now safely back at its 2% target after three years of overshooting. Part of the argument for the pause is that economic growth is better than feared, a premise underpinned by fresh data showing the euro zone economy grew by 0.6% in the first quarter, above the 0.3% estimated earlier, and retail sales were also robust. However, the strong growth figure is an anomaly, many economists say. It was driven by frontloaded exports to the United States before tariffs kicked in and data was especially distorted by Ireland, where growth is fuelled largely by activity among big foreign companies based there for tax reasons. Portuguese policymaker Mario Centeno, who has long warned about the risk of price growth going too low, said his colleagues should be alert inflation dipping too far below 2%. "The inflation rate (in the euro zone) is currently below 2% and this downward trend will worsen until the beginning of next year, when it will approach the dangerous level of 1%, or slightly above that," he said in Lisbon. "This is a scenario that should alert us," he said. Finland's Olli Rehn said there was a particular risk from the escalation of the trade war with the U.S. and the outlook was so complex, the ECB's adverse scenario could not take into account all outcomes. "For example, serious disruptions to supply chains and disruptions in financial markets have been excluded from the analysis," Rehn said in a blog post. Part of the reason inflation could go lower is that Germany, the bloc's biggest economy, will stagnate this year, marking the third year of zero or negative growth as its long-predicted recovery keeps getting pushed further and further out. While Germany's new government plans to sharply increase fiscal spending on defence and infrastructure, this will not significantly boost growth until the end of 2027, the Bundesbank said as it cut growth projections for this year and next. "Concerns about a persistent undershoot may soon resurface, especially if trade tensions escalate, weighing on demand," Oxford Economics said in a note. Others took a more benign view that was more in line with the ECB's view that inflation will rebound and hit the bank's 2% target. "The ECB's 2% inflation target has essentially been achieved," Estonian policymaker Madis Müller said. "The expected economic growth in the next couple of years is also likely to be quite moderate, which means that there is no reason to worry too much about price pressure related to the heating up of the economic environment." Latvia's Martins Kazaks said he was also comfortable with the outlook and made the case for the ECB to take a break in cutting rates, partly to preserve policy space and to await fresh data. "I don't think the market should expect the trajectory of cutting rates at every meeting to continue," he told Reuters. "There is no need and there is value in maintaining policy space."
Reuters
23-05-2025
- Business
- Reuters
ECB's Stournaras sees one more euro zone rate cut in June, then a pause, Greek media reports
ATHENS, May 23 (Reuters) - The European Central Bank is expected to cut euro zone interest rates one more time in June and then pause, policymaker Yannis Stournaras said in comments published on a Greek news outlet's website on Friday. The European Central Bank for the seventh time in a year last month and warned that economic growth will take a big hit from U.S. tariffs, bolstering bets for even more policy easing in the months ahead. "I believe we will reduce interest rates one more time in June and then I see a pause," Greece's central banker Stournaras was quoted as saying to Kathimerini. Echoing his view, Finnish central bank chief Olli Rehn also told Kathimerini: "We are applying data-driven thinking. So, if incoming data and macroeconomic analysis confirm the current outlook for stabilizing inflation and somewhat subdued growth, the appropriate response in June would be to continue monetary easing and lower interest rates." "Beyond June, let's stay on the path of data-driven decision-making at every meeting, especially as we find ourselves under the clouds of pervasive uncertainty due to geopolitics and trade wars," Rehn added.
Bloomberg
23-05-2025
- Business
- Bloomberg
ECB's Stournaras Sees June Rate Cut and Then Pause: Kathimerini
European Central Bank Governing Council members Yannis Stournaras and Olli Rehn anticipate a further reduction in the central lender's rates in June.
Bloomberg
09-05-2025
- Business
- Bloomberg
ECB's Rehn Says Disinflation on Track, Growth Outlook Weakening
The European Central Bank's outlook is unclear because of US tariff policy, according to Governing Council member Olli Rehn. 'Recent data has shown signs of recovery in the euro area, but the outlook remains clouded by exceptional uncertainty due to President Trump's trade war,' he told a conference in Helsinki, adding that 'disinflation on track and the growth outlook weakening' has allowed the ECB to cut interest rates seven times.
Reuters
09-05-2025
- Business
- Reuters
Euro zone disinflation on track but growth at risk, ECB's Rehn says
FRANKFURT, May 9 (Reuters) - The euro zone's fight to bring inflation back to the 2% target is on track but the growth environment is deteriorating, with a global trade war creating a significant risk in the outlook, Finnish central bank chief Olli Rehn said on Friday. "Given the pervasive uncertainty, the Governing Council is maintaining full freedom of action in monetary policy," Rehn told a conference in Helsinki. "We will adjust our rates to bring inflation to 2% in the medium term – just as our strategy tells us to do."
