MNI BRIEF: 'Momentus and Dangerous' Geopolitical Shift - Rehn
MNI (LONDON) - There is a "momentous shift taking place in global politics in a dangerous way for Europe,” Bank of Finland Governor Olli Rehn said Tuesday, noting that the continent needed to rapidly "come up with measures to support Ukraine and to boost its own defences.”
According to Rehn, uncertainty is weighing on investment in the euro area and on its exports, and the risks are on the downside. Inflation is stabilising at the target level, but growth in the economy is subdued, although a significant increase in Europe’s defence spending and in its investment in defence could increase the euro area’s production.
The Eurosystem forecast for the entire euro area shows an annual inflation rate of 2.3% for 2025 and 1.9% for 2026. Measures of underlying inflation also suggest that the inflation rate will settle at around the 2% target on a sustained basis.
After the 25bp rate cut in March, Rehn said the ECB will continue to take decisions on a meeting-by-meeting basis and as there is high uncertainty, the Governing Council will maintain complete freedom of action.”