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Sends Signal: ECB Council Member Olli Rehn Announces Key Interest Rate Hike in July – No Stagflation Expected | news

“We will not have stagflation in Europe like in the 1970s. The situation then and today is too different for that. But we see stagflationary trends,” said Olli Rehn in an interview with Welt newspaper.

Inflation is high and at the same time the economy is suffering from the Russian war in Ukraine. “The long shadows of the Covid crisis and Russian aggression against Ukraine are already putting a strain on the European economy. Energy prices are already high and now other raw materials are also becoming more expensive”.

However, Rehn warned that the ECB must react to prevent inflation expectations from becoming more stable. “We are seeing signs of second-round effects. We must therefore prevent inflation expectations from strengthening,” she said. “Therefore, it is important to send the appropriate signal. It is imperative to raise key interest rates in the third quarter, probably in July. And we will continue to normalize monetary policy, provided that the Russian war in Ukraine does not throw the European economy back. again”.

At the same time, Rehn allayed concerns about the consequences of a Russian gas supply freeze for the EU and Germany in particular. “We are all concerned about the economic consequences of not receiving gas supplies from Russia. We have become overly dependent on Russian oil and gas supplies and we must now end our energy dependence on Russia,” Rehn told Welt.

DJG / Jhe

FRANKFURT (Dow Jones)

Image sources: Petronilo G. Dangoy Jr. / Shutterstock.com, Oliver Hoffmann / Shutterstock.com

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