ECB’s Rehn sees downside risks to inflation, urges flexibility, no preset rate path

ECB’s Rehn sees downside risks to inflation, urges flexibility, no preset rate path

• ECB’s Rehn flagged rising downside risks to inflation, stressing policy flexibility and no preset rate path.

European Central Bank Governing Council member Olli Rehn, governor of the Finnish central bank spoke in an interview with Finnish newspaper Helsingin Sanomat on Sunday.

Rehn says the European Central Bank should take a flexible approach on interest rate decisions in the meetings ahed.

Rehns said there are more downside risks to EU-zone inflation stemming from

• a stronger euro
• cheaper energy
• easing of core inflation
• the damage trade-policy has caused to the global economy

He said euro area economic shocks "are now more complicated than before and there’s great uncertainty over inflation, which calls for flexibility in reacting to shifts in the economy.”

His ECB outlook:

• Governing Council is not pre-committed to any rate path and keeps full freedom of maneuver
• Rate decisions are taken meeting by meeting, based on the latest available data
• economic growth has held up
• inflation stabilized
• no reason to be complacent in the euro area

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The ECB is widely expected to leave its rates unchanged at 2% at its next meeting (September 10 and 11), after its hold decision in July.