ECB Governing Council member expects only moderate inflation in the medium term

Created: 01/24/2022, 11:54 am

The head of the Finnish central bank, Olli Rehn, expects that the inflation rate in the euro area will soon fall again.

© Boris Roessler/dpa

The head of Finland's central bank expects inflation to fall again in the coming years.

Berlin - The head of the Finnish central bank, Olli Rehn, expects that the drivers of inflation will subside over the course of the year and that the inflation rate in the euro area will be around two percent in the next two years.

The further pace of the normalization of monetary policy in the euro area depends on the data.

ECB Governing Council member backs interest rate hikes

"I personally assume that the economic data will remain relatively good despite the influence of the Omicron variant," said the ECB Governing Council member in an interview with the "Handelsblatt".

For this reason, he thinks rate hikes in 2023 are "logical", at least "if there are no new economic disruptions."

Rehn also warned that Germany's nuclear phase-out would increase dependence on Russia and destabilize the energy market.

"The decisions about energy policy in Germany affect price fluctuations and thus the uncertainty about inflation," added the ECB Governing Council member.

"For me, switching from coal to natural gas is not a green transition, and this transition phase will take a long time in Germany."

Finnish central bank governor says debt limit of 60 percent is unrealistic

In the debate about the EU fiscal rules, the head of the Finnish central bank called for adjustments.

The rules must be consistent, realistic and flexible at the same time.

"A debt limit of around 60 percent of gross domestic product, as prescribed by the previous regulation, is clearly unrealistic." He pointed out that Italy's debt ratio after the pandemic is expected to be around 160 percent.

"If goals are unattainable, they will not achieve anything."