ECB's Lane and Rehn Plan Further Rate Cuts to Achieve 2% Inflation Target by Midsummer

Jan 13, 2025, 07:13 AM

The European Central Bank (ECB) is poised to implement further interest rate reductions to fulfill its price stability mandate, as indicated by Chief Economist Philip Lane. Lane emphasized that a further decline in services inflation is necessary to achieve a sustainable inflation target of 2%. He noted the importance of balancing monetary policy actions to avoid excessive economic slowdown. Additionally, ECB board member Olli Rehn echoed these sentiments, stating that the current inflation trajectory is favorable and expressed confidence in stabilizing inflation at the 2% target. Rehn also mentioned that the growth outlook has weakened, and there are concerns regarding geopolitical developments. Both Lane and Rehn indicated that continuing rate cuts makes sense in the current economic climate, with Rehn suggesting that by midsummer, the ECB should exit restrictive territory.