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Investing.com -- Olli Rehn, a member of the European Central Bank’s Governing Council, recently suggested that a larger reduction in interest rates might be necessary. In an interview, he indicated that if inflation is projected to fall below the bank’s 2% target over the medium term in June, further rate cuts would be the correct response.
Rehn also expressed concern about the recent tightening of financing conditions and the realization of risks to economic growth. He highlighted the pervading uncertainty, stating that decisions would need to be made on a meeting-by-meeting basis due to these conditions.
The Finnish central bank governor stated that the European Central Bank will conduct a comprehensive assessment before deciding on rates. He also noted that a larger-than-normal 50-basis point rate cut could be considered, depending on the medium-term inflation outlook and the growth outlook’s trajectory.
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