(Bloomberg) -- The slowdown in inflation alongside weakness in the euro-zone economy strengthen arguments to lower borrowing costs next month, according to European Central Bank Governing Council member Olli Rehn.
“The growth outlook in Europe, especially manufacturing, is rather subdued,” the Finnish central-bank chief told Bloomberg TV’s Lisa Abramowicz on Friday. “In my eyes, this enforces the case for a rate cut in September.”
Speaking on the sidelines of the Federal Reserve’s annual conference in Jackson Hole, Rehn described the disinflation process as “on track.”
The ECB started lowering borrowing costs in June amid increased confidence that inflation would fall back to its 2% target in due time. Officials have left little doubt that more rate cuts will follow, though they won’t commit to a particular schedule because of the uncertain economic backdrop.
In recent days, though, a growing number of policymakers has endorsed market expectations for another reduction at the next meeting, in September, while also signaling that at least two cuts this year could be appropriate.
“A rate decision is never an easy call,” Rehn said. “But I think as we will get data for the moment, inflation is stabilizing in the long-term trend. There has been some, say, weaker data some time ago but now we see more convincing data concerning wage growth.”
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