ECB: Rehn: Weak Manufacturing Sector May Prevent Productivity Pick Up

The latest post-ECB meeting commentary has come Bank of Finland Governor Rehn, typically a centrist on the hawk/dove spectrum.

• The broad strokes are in line with yesterday's rhetoric ("We are not pre-committed to a specific interest rate path").
• However, Rehn added a little more colour on diverging fortunes of manufacturing and services in the Eurozone's recovery ("The economic development of the euro area rests increasingly on services"). 
• He notes that "if euro area industry and investments do not recover soon and growth remains dependent on services, then the projected pick-up in productivity growth may also be at risk". This would be an unwelcomed development for the projected slowdown in Euro-are unit labour costs.
• Rehn also stresses upside risks to inflation: "there is uncertainty surrounding the slowdown in inflation in the coming months, particularly due to persistent services inflation and underlying rapid wage development. The risks of higher-than-forecast inflation have therefore not disappeared".
• Link to blog post here: https://www.bofbulletin.fi/en/blogs/2024/rates-intact-for-now-monetary-policy-still-supports-disinflation/