The European Central Bank should follow the lead of the US Federal Reserve by agreeing to increase its interest rate to meet inflation for many years, says one of its officials.
Olli Rehn, who sits on the ECB’s interest rate court as Finland’s central bank governor, told the Financial Times that changes in the euro market and the global economy had slowed inflation and meant that “the economy could cope with unemployment.” .. without a quick swell ”.
“If so, in light of the economic and social conditions it makes sense to accept a certain period of [inflation] shooting overdue, considering the history of shooting down, “Rehn said.” That’s why, in addition to stabilizing trees, focusing on full-time or full-time jobs makes sense at the moment with minimal interest rates. “
The ECB has failed to meet the effects of short-term inflation but below 2% over the past decade, although it has reduced interest rates in the wrong areas and bought more than 4tn in bonds.
Rehn said the way the words are pronounced “created the concept of asymmetry and other abstract concepts”. The Bank of Finland estimates that the ECB’s inflation rate is 1.6 to 1.8%, Rehn adds: “The biggest disadvantage is that 2% is seen as a ceiling and this reduces the prospect of inflation.”
The ECB is expected to adjust its economic growth rate this autumn, when the initial 18-year review is completed. The EU alliance that established the ECB established their primary role as pricing stability, leaving it up to them to decide how to address this. Initially it set the target for inflation to be below 2%, but later it changed this to close, but below, 2%.
Last year, the Fed completed its term monitoring method and promised to allow inflation to continue while failing to function properly, a ideas being tested how inflation is expected to rise more than the required 2% this year.
Some members of the ECB’s governing body have also spoken in favor of the Fed. Philip Lane, chief economist at ECB, adauza FT recently that “there is a very strong idea” on the Fed’s ever-changing fashion trends.
The economic downturn in the Eurozone peaked in April, rising to 1.6 percent, after a change in the last months of last year. The ECB predicted that inflation would rise above 2% by the end of this year, before it dies next year and remain below its target by 2023.
If the ECB changes to accommodate more money than it needs, it could give the central bank more flexibility to continue buying bonds as the eurozone economy recovers from the end of the coronavirus epidemic.
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The central bank has said it will end the € 1.85tn emergency aid program it launched last year after judges ruled the epidemic was over. Until then, it has been committed to using bonds to maintain “income”, which experts interpret as meaning that its goal is to maintain a low yield.
This month, the ECB council is set to hold a seminar on financial and financial cooperation as part of the dialogue. Rehn said this includes discussions on how the two can connect when the economy is in crisis.
He also said the ECB should change some occupation after this difficult period, which he compared with a for free, or sweeping, in the ball – a player who walks around the back of the defense to pick up stray balls and return them to the attackers. Rehn played youth football for Finland’s first team as a teenager and is now second only to Fifa’s executive committee chairman.
“If you look at the integration of financial management principles and get out of this predicament. . . the financial plan should play out for free by making sure that it will provide the necessary funding to continue providing the bridge over difficult water, ”he said.
Rehn added that it was “absolutely necessary” for governments to prepare to reduce their debt, which has been the result of the epidemic. “Europe is in dire need of more financial resources. These cannot be permanently retained and sometimes the payment of [eurozone’s] there are many kings, ”he said.
Rehn was the former finance minister in Finland and was EU Commissioner for Economic and Social Affairs during the euro crisis in 2012, when he helped negotiate border crossings in Greece as part of a coalition.