ECB’s Rehn: Core Inflation ‘Annoyingly Tenacious’
11 May 2023
By David Barwick – FRANKFURT (Econostream) – Inflation was still much too high, with underlying price pressures vexingly sticky, European Central Bank Governing Council member Olli Rehn said on Thursday.
In a speech at a seminar in the Finnish city of Seinäjoki, Rehn, who heads the Bank of Finland, said that inflation was ‘still far too fast’, and that price pressures had ‘still not subsided’. In particular, core inflation ‘has proven to be annoyingly tenacious’, he said.
ECB rate hikes were reflected in higher market rates, he said, citing the 12-month Euribor.
‘Interest rate increases are intended to prevent inflation from spiralling out of control and the constant erosion of real purchasing power caused by galloping inflation’, he said. ‘Near-term growth may be somewhat more subdued due to the rise in interest rates, but the risk of a long-term economic crisis is lower as long as inflation is stabilized.’
‘The strong employment situation continues to support the economy both in Finland and elsewhere in Europe’, he added.