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ECB's Rehn expects euro zone inflation of around 2% in next two years -Handelsblatt

EconomyJan 23, 2022 02:20PM ET
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© Reuters. FILE PHOTO: Finland's central bank governor Olli Rehn speaks during an interview in Helsinki, Finland July 17, 2018. REUTERS/Ints Kalnins

BERLIN (Reuters) - The drivers of inflation in the euro zone will subside over the course of the year and inflation will hover around the European Central Bank's price stability target of 2% in the next two years, Finnish central bank chief Olli Rehn was quoted as saying on Sunday.

In a pre-released interview with German business daily Handelsblatt, Rehn said the future pace of normalization of the ECB's loose monetary policy depended on the economic data.

"Personally, I expect the economic data to remain relatively good despite being affected by the Omicron variant," Rehn said, adding he therefore viewed rate hikes in 2023 as a logical step, at least as long as there are no new economic shocks.

Rehn, who is also an ECB Governing Council member, pointed out that Germany's nuclear phase-out at the end of the year would increase dependence on natural gas imports from Russia and bring more volatility to energy markets.

"The decisions about energy policy in Germany affect price fluctuations and thus the uncertainty about inflation," Rehn said.

"For me, switching from coal to natural gas is not a green transition, and this transition phase will take a long time in Germany," he added.

In the debate about the European Union's fiscal rules, the head of the Finnish central bank backed calls for a reform to make the so-called Stability and Growth Pact more consistent, realistic and flexible at the same time.

"A debt limit of around 60 percent of gross domestic product, as prescribed by the previous regulation, is clearly unrealistic," Rehn said, pointing to Italy's debt-to-GDP ratio which is projected to be around 160% after the pandemic.

"If goals are unattainable, they will not achieve anything either," Rehn said.

ECB's Rehn expects euro zone inflation of around 2% in next two years -Handelsblatt
 

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Comments (6)
Vince Brooks
Caspian Jan 23, 2022 5:29PM ET
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Only 2%??? LMAO!!!!!!!
Roy Nisani
Roy Nisani Jan 23, 2022 5:13PM ET
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he might be right , but the other key note is recession , the only way inflation will be 2% is if we enter recession , if they want to avoid recession the inflation will be much higher
Alpha Omega
Alpha Omega Jan 23, 2022 5:12PM ET
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Money Launderers couldn't care less one way or other. And EU governments depend on that mullah. THEY ARE PARTNERS 👍
Bikash Prajapati
Bikash Prajapati Jan 23, 2022 4:44PM ET
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What inpact this might create in commodity and other sector? Anyone please
Mokhtar Belalia
Mokhtar Belalia Jan 23, 2022 3:07PM ET
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Life long transitory
Chad RicherThanYou
Chad RicherThanYou Jan 23, 2022 3:03PM ET
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This will age badly
 
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