ECB’s Rehn sees growing likelihood of rate cut this month amid eased inflation

Easing inflation pressures and a deteriorating eurozone economy are making a case for an interest rate cut this month, said European Central Bank (ECB) Governing Council member Olli Rehn on Tuesday.

“We have received further confirmation from recent statistical data that inflation is slowing down,” Rehn said following the release of the euro-area inflation data this morning.

Rehn Sees Growing Likelihood of ECB Rate Cut This Month

“This means, at least in my eyes, that there have been more grounds for lowering rates at our October meeting (October 17). The recent weakening of the euro area’s growth prospects tilts the scales in the same direction.”

His comments follow President Christine Lagarde’s indication of growing optimism about controlling inflation, hinting at increasing momentum for a potential rate reduction.

Rehn reiterated the ECB’s data-dependent approach, emphasising the need for careful analysis before making decisions.

While the ECB has previously cut rates during meetings coinciding with new economic projections, markets currently anticipate a greater than 85 per cent likelihood of another reduction this month. However, Rehn cautioned that ongoing economic headwinds complicate the outlook, stating, “I can’t yet declare that a so-called soft landing is ensured.”

Attribution: Bloomberg

Subediting: Y.Yasser