(Bloomberg) — European Central Bank Governing Council member Olli Rehn said frontloading interest-rate increases to stem inflation may mean officials don’t have to take even more drastic action down the line.
(Bloomberg) — European Central Bank Governing Council member Olli Rehn said frontloading interest-rate increases to stem inflation may mean officials don’t have to take even more drastic action down the line.
“By acting swiftly now, we should be able to avoid what is often called a ‘Volcker shock’,” he said Monday in a column, referring to the “rigorous disinflationary policies of the early 1980s” by former Federal Reserve chief Paul Volcker.
Rehn, who heads Finland’s central bank, also said:
- “Policy rates will still have to rise significantly to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target”
- “We will stay the course. Ceteris paribus, this means significant rate hikes in the following meetings”
- “But the near term is shrouded in uncertainty, and we need to keep an open mind to adjust our policies if needed”
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