ECB Governing Council Rennes: Weak economic growth in Europe could further reduce inflation

Inflation was steadily returning to the 2 per cent target across the eurozone, but weak economic growth raised the risk of further price declines, according to Mr. Rehn, the ECB's governing body. "The disinflationary process in the eurozone is on track," Mr. Rehn said. "The growth outlook has weakened significantly over the past few months, which could also increase pressure for further declines in inflation." He argued that interest rate cuts were continuing, but he would not say how fast or how far they would need to be cut. Mr. Rehn said the direction of interest rate movements was clear as our rates remained in a restrictive range. He also said the pace and scope of rate cuts would depend on the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.