In a presentation on the economic outlook, Bank of Finland Governor and European Central Bank Governing Council member Olli Rehn supported the ECB’s meeting-by-meeting approach to interest rate decisions as the Middle East crisis weakens global growth and creates uncertainty over inflation. The ECB has raised its key rates twice in 2026 in response to the inflation outlook and related risks. Energy inflation has not yet spread to non-energy prices or wages, but Rehn warned that this risk would increase if the conflict persists. Euro area growth remains subdued despite the economy’s resilience. Higher long-term interest rates, driven by demand for capital from artificial intelligence investment, inflation expectations, rising public debt and higher investor risk premiums, are slowing growth and limiting the transmission of energy costs to other prices and wages. Rehn also called for sustainable public finances to preserve capacity for technology and defence investment, stressing that Finland must meet its obligations under the European Union’s excessive deficit procedure and place its debt-to-GDP ratio on a sustained downward path.
Bank of Finland Governor Olli Rehn backs meeting-by-meeting ECB rate decisions amid Middle East inflation risks
Bank of Finland Governor Olli Rehn backed meeting-by-meeting ECB rate decisions as the Middle East crisis clouds the inflation outlook and slows growth. Energy inflation has not yet spread to other prices or wages, but the risk rises as the conflict continues. Rehn also urged Finland to put its debt ratio on a sustained downward path while preserving room for technology and defence investment.