Latest news with #OlliRehn
Reuters
03-07-2025
- Business
- Reuters
ECB wary of rising global trade uncertainty, ECB accounts show
July 3 (Reuters) - Euro zone policymakers cut rates last month to prevent an unwarrented tightening of monetary conditions and in the face of elevated uncertainty around trade, the accounts of their June 3-5 meeting showed on Thursday. The ECB cut interest rates for the eighth time in a year last month but signalled a pause in any further easing as inflation is already back at target and erratic U.S. trade policy creates too much uncertainty. "Members underlined that the outlook for the global economy remained highly uncertain," ," the ECB said. "Elevated trade uncertainty was likely to prevail for some time and could broaden and intensify." A pause in July has become an even greater certainty in the weeks since the June meeting as the majority of policymakers have lined up behind a hold on the premise that key data and clarity on trade talks will not become available by their meeting. Markets are also on the same page. Investors only see only one more cut in the ECB's 2% deposit rate, sometime towards the end of the year, before policy tightening in late 2026. "Indicators for April and May already suggested some slowdown," in the global economy, the ECB said. Although most policymakers argue that the ECB has essentially delivered on its target, some, including Finland's Olli Rehn, Portugal's Mario Centeno and Belgium's Pierre Wunsch have warned about the risk of inflation going too low, requiring even more support. Indeed, price growth is projected to dip below the ECB's target later this year and stay under 2% for 18 months on a strong euro, low energy costs, and cheap Chinese imports, before coming back to target. Others, however, warn that deglobalisation, a green transition and population's ageing, will raise price pressures further out and the ECB could soon face above target inflation, once again.
Reuters
02-07-2025
- Business
- Reuters
ECB should keep rates at 2% unless new shocks hit, IMF says
SINTRA, Portugal, July 2 (Reuters) - The European Central Bank should keep its deposit rate at the current 2% level unless new shocks materially change the inflation outlook, Alfred Kammer, head of the IMF's European Department, said on Wednesday. The ECB has cut rates by two percentage points since June 2024 but signalled a pause for this month, even if financial investors still see another cut to 1.75% later this year. "Risks around euro zone inflation are two-sided," Kammer told Reuters on the sidelines of the ECB Forum on Central Banking in Sintra, Portugal. "This is why we think the ECB should stay the course and not move away from a 2% deposit rate unless there is a shock that materially changes the inflation outlook. Right now we don't see anything of such magnitude." Part of the reason why the IMF is taking a different view than markets is because it anticipates higher inflation next year than the ECB. The ECB projects price growth falling below its 2% target for 18 months from the third quarter, bottoming out at 1.4% in early 2026. "For next year, we see inflation at 1.9%, which is above the ECB's own projections, partly because we take a different view on energy prices,' Kammer said. While most ECB policymakers see inflation risks balanced, there is an increasing group, including Finland's Olli Rehn, Belgium's Pierre Wunsch and Portugal's Mario Centeno, who have all warned about the risk of inflation falling too low.
Bloomberg
02-07-2025
- Business
- Bloomberg
ECB's Rehn on Inflation, Euro Exchange Rate, US Tariffs
European Central Bank Governing Council Member Olli Rehn says the euro-area is "in a good place" in terms of inflation, but the ECB should not get complacent. "I am quite concerned about inflation being below target for an extended period of time," Rehn tells Bloomberg's Francine Lacqua on the sidelines of the ECB Forum on Central Banking in Sintra, Portugal. He also discusses the euro exchange rate and the potential impact of US tariffs on the economy. (Source: Bloomberg)
Bloomberg
02-07-2025
- Business
- Bloomberg
ECB's Rehn Worried About Effects of Lengthy Inflation Undershoot
European Central Bank Governing Council member Olli Rehn is worried that inflation staying below 2% for a lengthy period could shift the price outlook of euro-zone consumers. The ECB is projecting 18 months of inflation below its goal as US tariffs dent confidence and the 20-nation economy struggles to expand. Rehn, who heads Finland's central bank, said risks are currently two-sided, but is more uneasy about the knock-on effects of the undershoot.
Zawya
02-07-2025
- Business
- Zawya
ECB should consider mildly supportive stance as on low growth, inflation, Wunsch says
SINTRA, Portugal - Euro zone inflation is at risk of falling short of the ECB's target and there is a case for the bank to provide a mildly supportive policy stance, Belgian central bank Governor Pierre Wunsch said on Wednesday. The ECB has cut rates by two full percentage points since last June, and its 2% deposit rate provides a so-called "neutral" setting, which neither slows nor stimulates economic growth. However, the growth outlook was muted and inflation could be pulled down by a host of factors, suggesting that neutral may not be enough, Wunsch argued. "There is an argument for providing a mildly supportive policy stance," Wunsch told Reuters in an interview. "If the recovery is delayed — and it has been delayed a few times — and output is below potential, then being supportive is rational." He added that the euro's surge to 1.18 against the dollar, its highest level since late 2021, was also an argument to provide this support, since the stronger currency would dampen inflation and could also weigh on economic growth. Cheap imports from China, lower energy prices, the lack of tariff retaliation, the strong euro and a substantial slowdown in wage growth were all putting downward pressure on prices, Wunsch said, joining Portuguese policymaker Mario Centeno and Finland's Olli Rehn in warning about the risk of too-low inflation. "All these factors combined suggest that the upside risk is limited and the overall risk is to the downside," Wunsch said. ECB projections see inflation below 2% for 18 months from the third quarter, before a return to target in early 2027. Financial markets anticipate one more rate cut from the ECB later this year, taking the deposit rate to 1.75%, a stance some already consider to be mildly stimulating. "I don't disagree with market pricing for interest rates," Wunsch said. "I won't endorse expectations but I am also not uncomfortable with them either." But Wunsch also appeared to play down worries that ECB rates would have to go too deep, arguing that the economy was holding up well. "I am not overly concerned about growth," Wunsch said. "Recent national PMI numbers were rather comforting. German fiscal plans are also game changing. Major fiscal expansion by a country that can afford it, provides a major boost."
