In an interview today, ECB Governing Council member Olli Rehn indicated that market data suggests the likelihood of two additional rate cuts, bringing the rate to 3.25% by the end of the year. He also noted that the terminal rate for this easing cycle is expected to fall between 2.25% and 2.50%. Rehn described these projections as “reasonable expectations.”
Despite recent economic data overshooting expectations, Rehn affirmed that “disinflationary process is going on,” although it may be bumpy. He added that ECB would maintain its course and “continue rate cuts” to ensure this process remains on track.
Rehn further elaborated that current interest rates are still in “restrictive territory,” underscoring ECB’s work to ensuring that the “disinflationary process will continue.” He stressed that the central bank’s primary goal is to control inflation, but also highlighted its broader responsibilities.
“Without compromising our primary objective,” Rehn said, “we also have a responsibility to support full employment, sustainable development, and balanced growth.”
