The European Central Bank should move quickly to raise interest rates to cope with soaring inflation, according to Finland’s central bank governor.
His comments come as the US Federal Reserve and the Bank of England’s austerity cycle increase the pressure on the ECB to follow.
“We have a conflict in monetary policy pressure,” Olli Rehn, Governor of the Bank of Finland and a member of the ECB̵[ads1]7;s Governing Council, told CNBC’s Silvia Amaro on Friday.
“We are almost in the middle of nowhere, so on the one hand we must ensure that the upswing continues. On the other hand, we must prevent higher inflation expectations from being anchored and reflected in the labor market.” in Rehn.
“In other words, we must avoid other round effects. Therefore, in my view, we should move relatively quickly to zero and continue our gradual process of normalizing monetary policy as we have done,” he continued.
“Of course, all this provided that Russia’s war in Ukraine will not escalate and intensify significantly, which could derail all the forecasts and the economic recovery.”
Like many central banks around the world, the ECB is trying to control the eurozone economy through a rise in inflation that has been exacerbated by Russia’s unprovoked attacks on Ukraine.
This is news and will be updated soon.