Inflation will continue to decline and interest rate cuts will support economic recovery, Finnish ECB policymaker Olli Rehn said in a blog post on Friday.
The possible scale of interest rate cuts in the next few years could be in the range of 1 to 2 percentage points, given there won’t be any new shocks to the economy, Rehn said, while adding that this was not a policy prediction.
“Yesterday, we were able to send positive news about the economy from Frankfurt for a change: the severe inflationary pressure has subsided and the interest rate cut also supports the recovery of growth,” Rehn wrote.
On Thursday, the European Central Bank went ahead with a widely flagged first interest rate cut since 2019, citing progress in tackling inflation even as it acknowledged the fight was far from over.
Cutting its deposit rate to 3.75% from a record-high 4.0%, the ECB gave no indication as to whether that would be followed by a further easing in July.
