ECB’s Rehn: ECB Has Instruments to Keep Inflation Under Control

18 January 2022

By David Barwick – FRANKFURT (Econostream) – The European Central Bank has the instruments to keep inflation from getting out of control, ECB Governing Council member Olli Rehn said on Tuesday.

In a speech for an event of a Finnish high school, Rehn, who heads the Bank of Finland, said that although energy prices, supply bottlenecks and base effects were pushing inflation up, ‘wage developments, which are a key factor in inflation dynamics, have remained relatively subdued in the euro area.’

‘Euro area inflation has been below target for years’, he continued. ‘The recent turnaround has raised concerns about too high inflation. If inflation threatens to accelerate excessively, the ECB has the tools in its monetary policy to prevent it by reducing its purchasing programs and financing operations and by raising key interest rates.’

The pandemic crisis was not yet over and it would be necessary to live with the Coronavirus ‘for some time to come’, he cautioned.

‘The economic recovery in the euro area and Finland continues, although the fastest economic growth is slowing down’, he said. ‘Finland has survived the corona pandemic better than initially feared, thanks in large part to our responsibility for each other. It is still needed.’