(Bloomberg) — European Central Bank Governing Council member Olli Rehn warned that underlying price gains, which officials are using as a guide for how high to raise interest rates, aren’t easing as quickly as headline inflation.
(Bloomberg) — European Central Bank Governing Council member Olli Rehn warned that underlying price gains, which officials are using as a guide for how high to raise interest rates, aren’t easing as quickly as headline inflation.
“The rise in consumer prices in the euro area is slowing, but not to the extent desired,” Rehn said Tuesday in a press release. “Inflation excluding energy and food is falling only gradually.”
Addressing reporters later, he said a pullback in that measure is a pre-requisite for pausing rate hikes.
“I can say that I consider core inflation a very important, essential yardstick in the overall judgment of monetary-policy making,” Rehn said. “Its important that core inflation is on a steady and sustained decline.”
He also said:
- Forecasts are one element of the ECB’s comprehensive judgment. Particularly in uncertain times, it’s essential to focus on incoming data
- Especially now, monetary policy has become as much as art as it is science
- Reiterating the ECB’s policy statement from last week, Rehn said: “We will bring interest rates to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and keep them there as long as necessary”
(Updates with more comments from Rehn starting in third paragraph.)
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