HELSINKI (Reuters) – Slowing inflation in the euro zone means there is now more reason to justify an interest rate cut at the European Central Bank’s (ECB) monetary policy meeting in October, Bank of Finland Governor Olli Rehn said in a speech on Tuesday.
The eurozone economy has been teetering on the edge of recession for most of the year and price pressures have eased more than expected in recent months, fueling arguments that the ECB has fallen behind in adjusting its its monetary policy in the face of an economy in difficulty.
“Recent statistical data has once again confirmed that inflation is slowing. In my opinion, this means that there are now more reasons to justify a rate cut at our October meeting,” explained Olli Rehn.
The recent weakening of the euro zone’s growth prospects also tips the scales in the same direction, says Olli Rehn, according to whom the euro zone inflation rate will stabilize around the ECB’s 2% target during the year 2025.
“However, we need to closely monitor the data and carry out a comprehensive analysis before making decisions, as always,” says the monetary policy official.
The ECB Governing Council will decide the pace and extent of further rate cuts at each meeting, he concluded.
(Written by Anne Kauranen in Helsinki, Bertrand de Meyer, edited by Blandine Hénault)
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