The European Central Bank (ECB) is set to continue lowering interest rates, with plans to exit its restrictive monetary policy by mid-2025, according to Finnish policymaker Olli Rehn.

Market analysts predict that the ECB's interest rate will reach the lower end of its target range by June 2025, potentially falling below this threshold by the end of the year.

In 2024, the ECB implemented four interest rate cuts, reducing the rate to 3%, and is expected to make four additional cuts in 2025 due to persistent inflation and sluggish economic growth in the Eurozone.

In a recent interview with Bloomberg TV, Rehn stated that it is sensible for the ECB to continue implementing rate cuts.

Rehn noted that companies often adapt to tariffs by rerouting supply chains through countries like Mexico and Vietnam, which, while increasing operational costs, enhances resilience against trade barriers.

Rehn indicated that the incoming U.S. administration's trade policies may increase business costs and create further uncertainty in the economic landscape.

While skeptical about the effectiveness of trade tariffs, Rehn acknowledged that companies often find ways to circumvent such barriers, which can enhance economic resilience but also raise overall costs.

Rehn emphasized the ECB's independence in its policy decisions, clarifying that it operates separately from the Federal Reserve's approach.

He asserted that 'the ECB is not the 13th federal district of the Federal Reserve System,' highlighting that the bank's decisions are focused solely on maintaining price stability within the Eurozone.

Rehn previously estimated the neutral interest rate, which balances economic stimulation and restriction, to be between 0.2% and 0.8% in inflation-adjusted terms, suggesting a deposit rate range of 2.2% to 2.8% with a 2% inflation target.

He expressed concerns about the uncertainties related to potential U.S. trade tariffs under President-elect Donald Trump, which could complicate the economic outlook for businesses.

Despite recent decreases in direct trade between China and the U.S., Rehn mentioned that value chains are being adjusted through intermediary countries like Mexico and Vietnam.