-- Investor expectations for the European Central Bank to loosen monetary policy twice more this year — and bring borrowing costs to as low as 2.25% in 2025 — are fair, according to Governing Council member Olli Rehn .In some of the most explicit remarks from an ECB policymaker on the path for interest rates, the Finnish central-bank chief also said that while officials must ensure inflation returns to 2%, they shouldn’t overly dampen economic activity .
“In case we see the disinflationary process continuing and moving toward our symmetric 2% target of the medium term, then it is reasonable to assume that we stay with this direction and continue rate cuts,” he said.Despite recent data overshoots, “we have a disinflationary process going on” and “always knew that it’s going to be a bumpy road,” Rehn said. “We have to see the forest for trees.”
ECB rates are “still quite clearly in the restrictive territory and the aim is to ensure that the disinflationary process will continue,” he said. “Without compromising our primary objective, we also have a responsibility to support full employment, sustainable development and balanced growth.
Describing what’s happened of late in France as a “repricing,” Rehn rejected the notion that another debt crisis may be brewing — like the one he helped battle back when he was European commissioner for economic and monetary affairs.
Source: Loan Digest (loandigest.net)
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