The member of the European Central Bank are pressuring the committee for a quick move in raising interest rates in order to curb surging inflation, while requiring the balance of policy to keep the economic recovery in place, according to Olli Rehn, governor of the Bank of Finland and member of the Governing Council of the ECB, speaking to CNBC.
“We are almost in between a rock and a hard place so that on one hand we have to ensure that the recovery will continue. On the other hand, we have to prevent higher inflation expectations being entrenched and being reflected in the labor market,” Rehn said.
The statement came after the U.S. Federal Reserve decided to increase its policy rate by 0.50 percentage point on Wednesday, which was the most aggressive move made in a single hike since May 2000.
The Bank of England followed suit on Thursday by raising its interest rate by 0.25 percentage point to a full percentage point, its highest rate since 2009.
The U.S. inflation in January to March was 7.5%, 7.9% and 8.5%, respectively. Economists expected inflation in April to rise to 8.8%. Meanwhile, inflation in the Euro area is also expected to rise as well, increasing from 7.4% in March to 7.5% in April.
The governor of Finland’s central bank noted that an escalation of war between Russia and Ukraine could derail the economic recovery.
