ECB's Rehn on Inflation, Euro Exchange Rate, US Tariffs

Inflation & Monetary Policy - The ECB believes it is currently in a good place regarding inflation, but there is no room for complacency as risks are two-sided [1] - The ECB's projection indicates that inflation is likely to be below target for 18 months, requiring vigilance to prevent it from becoming persistent [1][2][5] - The ECB is not committed to any particular rate buffer and will make decisions based on data dependency and meeting-by-meeting analysis [3] - The ECB is closely monitoring exchange rate developments, but the exchange rate is not a positive target; the mandate is price stability [5] - The appreciation of the euro has helped in reaching the 2% inflation target, but its persistence could affect the competitiveness of European export industries [6][8] Economic Outlook & Risks - Geopolitical tensions, the trade war, and artificial intelligence are significant factors influencing economic decisions [4] - The trade war's overall result is likely to increase inflation pressures in the US while dampening inflation in Europe due to a more subdued growth outlook [11][12] - The outcome of trade negotiations will impact the trajectory for the eurozone economy [9] Euro as a Reserve Currency - The Eurozone has stronger confidence in Europe and aims to turn this into concrete policy measures to support European industrial competitiveness and productivity growth [13][14] - The euro is already the number two reserve currency in the world and has real chances to become more important, potentially leading to structurally lower interest rates [15][16] - The Eurozone is willing to share some of the "exorbitant burden" of the international reserve currency currently held by the US dollar [16][17]