ECB Governing Council member Olli Rehn commented that disinflation process in the Eurozone is “well on track.” He acknowledged, however, that the economic growth outlook has “weakened quite clearly” over the past few months, which could “increase disinflationary pressures” moving forward.
Despite these developments, Rehn expressed that he is “not yet so concerned” about an undershoot in inflation, noting that both services inflation and wage inflation are still above the ECB’s 2% target. He added that the “danger of undershooting is not yet verified”.
Rehn also emphasized that the pace and extent of future rate cuts would depend on multiple factors, including “the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission.” This reflects the ECB’s continued data-dependent approach to future monetary policy decisions.
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