(Bloomberg) -- The European Central Bank had “good reasons” to ease monetary policy on Thursday and cut interest rates as inflation continues to slow down with expectations for price gains near the central bank’s inflation target, according to Governing Council member Olli Rehn.
- On the other hand, the growth outlook for the euro area economy is more muted than predicted amid weakness in the industry, Rehn says in a blog post published on the Bank of Finland website on Friday.
- Rehn says monetary policy “can best support sustainable growth and the investments required to raise productivity by securing price stability.”
- The Finnish central banker sees the current uncertainties further emphasize the dependence on fresh data and analysis about the economy.
- “The ECB’s decisions are made on a meeting-by-meeting basis, and there is no pre-commitment to an interest rate path. We therefore retain full freedom of action and flexibility in making interest rate decisions in all future meetings.”
- Rehn said the “slowdown in inflation, combined with the rather rapid increase of wages, supports the growth of households’ real disposable income in the euro area, which, over time, strengthens the now subdued growth of the economy.”
- “There are still question marks associated with the growth outlook, risks to the downside,” Rehn said, following the ECB’s revision of its growth forecast this year to 0.8%.
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