ECB’s Rehn Expects Euro Area Inflation to Stabilize at 2% in 2025, According to Reuters

HELSINKI (Reuters) – Finnish European Central Bank (ECB) policymaker Olli Rehn stated in a speech on Tuesday that the inflation rate in the euro area is expected to stabilize at the ECB’s 2% target by 2025.

“The direction of monetary policy is clear: interest rate cuts have begun, and our monetary policy stance is becoming less restrictive,” Rehn noted.

He emphasized that the ECB’s governing council will decide on the pace and magnitude of future rate cuts during their meetings.

Rehn, who also leads the Bank of Finland, cautioned that while a soft landing for the euro area economy is anticipated, a recession could still occur if several negative growth risks materialize at once.

Additionally, Rehn highlighted the need for Europe to improve productivity, as rising energy costs due to Russia’s invasion of Ukraine have adversely affected industrial output in the region. He warned, “If significant reforms cannot be achieved, a more permanent weakening in manufacturing could jeopardize the euro area’s competitiveness.”