ECB's Rehn warns of risk if inflation surge lasts much longer
Reuters
Published Oct 19, 2021 10:39
Updated Oct 19, 2021 11:50
FRANKFURT (Reuters) -The surge in inflation in the euro zone is still mostly temporary but households and firms will start to lift their price expectations if it lasts much longer, European Central Bank policymaker Olli Rehn said on Tuesday.
Inflation in the euro zone hit 3.4% last month according to flash estimates amid higher energy prices and supply constraints pushing up the price of a range of goods.
"If this state of elevated inflation were to last much longer, it would likely have a more significant effect on inflation expectations," Rehn, the Finnish central bank governor, said in a speech.
"Indeed, the selling price expectations, three months forward, of both the industrial and the retail sectors have started to rise amid these temporary price pressures," Rehn said.
He added that "some" factors driving up inflation were proving more persistent than previously thought but, on balance, the evidence still pointed to price growth easing.
"The counter evidence speaking for the transitory interpretation is quite convincing," Rehn said. "When looking at the longer-term expectations, there is no upward trend...(and) core inflation in the euro area is still subdued."
"Wage growth is still below (the) pre-Covid average, despite significant sectoral labour shortages," Rehn added.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.