ECB’s Rehn sees euro zone inflation stabilizing at 2% in 2025, by Reuters

HELSINKI (Reuters) – The euro zone’s inflation rate will stabilize at the European Central Bank’s 2 percent target during 2025, Finnish ECB deputy Olli Rehn said in a speech on Tuesday.

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

The ECB’s Governing Council will decide on the pace and extent of further interest rate cuts on a meeting-by-meeting basis, he added.

Rehn leads the Bank of Finland, which has warned that the soft landing predicted for the eurozone economy could further turn into a recession if several downside risks to growth materialize simultaneously.

Europe needs to find ways to boost productivity as rising European energy costs following Russia’s invasion of Ukraine have hurt industrial output in the region, Rehn said.

“Unless significant reforms can be achieved, a more permanent weakening of output would threaten the competitiveness of the euro area,” he added.