The European Central Bank should move quickly to raise interest rates to tackle soaring inflation, according to the head of Finland’s central bank.
His comments come as the US Federal Reserve and the Bank of England’s tightening cycle intensifies pressure on the ECB to follow suit.
“We have a conflict in monetary policy pressures,” Olli Rehn, Governor of the Bank of Finland and member of the Governing Council of the ECB, told CNBC’s Silvia Amaro on Friday.
“We are almost between a rock and a hard place, so on the one hand we need to ensure that the recovery continues. take root and be reflected in the labor market”, says Rehn.
“In other words, we need to avoid second-round effects. Therefore, in my view, we should get to zero relatively quickly and continue our gradual process of monetary policy normalization as we have been doing,” he said. he continued.
“Of course, all this on the condition that Russia’s war in Ukraine does not escalate and escalate substantially, which could derail all forecasts and economic recovery.”
Like many central banks around the world, the ECB is seeking to steer the eurozone economy through an inflationary spurt that has been exacerbated by Russia’s unprovoked attack on Ukraine.
This is breaking news and will be updated shortly.