According to Olli Rehn, President of the Central Bank of Finland, the European Central Bank (ECB) has not yet reached the peak in its hawkish course in the fight against high inflation. “Interest rates will still have to go up significantly,” the ECB Governing Council member said in a webinar organized by the Peterson Institute for International Economics.
Levels that slow the economy sufficiently to ensure a timely return to the medium-term inflation target of 2% must be reached. “So we are on the right track,” he said. “That means significantly raising interest rates on outstanding meetings this winter.” This depends on the economic data and the development of forecasts.
The long- and medium-term inflation outlook is still going relatively well for the time being, Ren said. “Our task now is to maintain this by taking strong enough steps now so that we can avoid a very tight monetary policy shock in the future,” he said.
The European Central Bank last raised its key interest rates by 0.50 percentage point in December. European Central Bank President Christine Lagarde announced further interest rate increases of 0.50 percentage points each at upcoming meetings. Inflation in the eurozone last reached 9.2% in December – more than four times the European Central Bank’s target of 2%.
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