The ECB May Slash Rates Further: Olli Rehn
Potential Additional Interest Rate Reductions Suggested by Rehn (ECB)
Get ready for potentially lower interest rates! According to Olli Rehn, ECB governing council member and Finland's central bank chief, the European Central Bank might need to make deeper cuts than previously thought. In a tell-all chat with Bloomberg, he hinted at a larger cut if inflation remains below the target of 2% in June.
Currently, the deposit rate in the eurozone stands at 2.25%, following a 0.25% reduction during the ECB's meeting in Frankfurt last week. With market forecasts predicting at least two more rate cuts this year, experts suggest the terminal rate could land somewhere between 1.50% and 1.75% by year-end.
However, it's important to note that the ECB's decisions are data-driven and made on a meeting-by-meeting basis. Economic conditions constantly evolve, so any future decisions will be influenced by the latest data.
Recent tightening in financing conditions and visible risks to economic growth mean the ECB will conduct a thorough review. As Rehn wisely stated, "There is so much uncertainty in the air that we have to go meeting by meeting."
Your questions about the ECB's moves and their impact on the eurozone can be directed to the newsroom under berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).
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[Enrichment Data]: The European Central Bank (ECB) has recently lowered its interest rates, with the deposit facility rate now at 2.25% after a 25 basis point cut on April 17, 2025. Market expectations suggest at least two more rate cuts in 2025, potentially bringing the terminal rate between 1.50% and 1.75% by the end of the year. Given the current economic and trade tensions affecting the eurozone, additional rate cuts seem plausible to support economic stability and align inflation with the ECB's 2% target. The exact magnitude of further cuts would depend on future assessments of inflation dynamics and economic resilience.
- The ECB's potential further interest rate cuts, as suggested by Olli Rehn, could lead to potentially lower rates that may impact various businesses and the finance sector in the eurozone.
- If inflation remains below the ECB's target of 2% in June, the European Central Bank might make deeper cuts to inflation, as hinted by Olli Rehn.
- As mentioned by Rehn in his chat with Bloomberg, the ECB's decisions could be influenced by visible risks to economic growth and the need to conduct a thorough review in light of recent tightening in financing conditions.
- Questions about the ECB's moves and their impact on the eurozone can be directed to the Thomson Reuters newsroom, which covers politics, economics, companies, and markets.
