ECB's Rehn Urges Calm Judgment on Eurozone Inflation

Finnish central bank governor and European Central Bank Governing Council member Olli Rehn urged policymakers to exercise calm judgment rather than haste in addressing the eurozone's surging inflation, emphasizing the need to assess the long-term persistence of price pressures amid disruptions in global energy markets. Speaking at a conference in Washington on April 16, Rehn highlighted the risks posed by recent geopolitical tensions in the Middle East, which have driven oil prices higher and pushed inflation well above the ECB's 2 percent target.

Eurozone inflation exceeded the target last month, primarily due to sharp increases in energy costs from oil price volatility linked to ongoing conflicts in the region, including military actions affecting Iran's involvement and potential disruptions to the Strait of Hormuz. Rehn noted that while a rise in headline inflation this year appears unavoidable, the medium-term outlook remains uncertain. "What matters most is not the immediate increase in prices, but whether the shock has persistent effects on inflation and the general price level," he said. The current economic environment, he added, is "foggy," with the ECB monitoring...