Olli Rehn, head of the European Central Bank (ECB), said the monetary authority needed to act quickly on a hike in interest rates to deal with rising inflation amid the war between Russia and Ukraine.
“We have a conflict of pressures on monetary policy,” Rehn said in an interview with the broadcaster. CNBC this Friday (6th).
“We are almost between a rock and a hard place so, on the one hand, we have to ensure that the recovery continues. On the other hand, we have to prevent higher inflation expectations from becoming entrenched and reflected in the labor market,” he added.
To avoid side effects, Rehn said the ECB needs to “move relatively quickly to zero and continue” its gradual process of monetary normalization. The ECB deposit rate currently stands at -0.50%.
Rehn, who is also the head of the Central Bank of Finland, stressed, however, that the ECB’s action will depend on the war in Ukraine not escalating to the point of jeopardizing “all projections and the economic recovery” of the euro zone.
Source: CNN Brasil
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