FRANKFURT – Russia’s war in Ukraine is driving up inflation, providing the justification for the European Central Bank’s decision to speed up its exit from exceptionally easy monetary policy, Finnish Governing Council member Olli Rehn said on Tuesday.
“With inflation rising sharply, there has been good reason to expedite the normalisation of monetary policy,” Rehn said in a statement.
The ECB promised a 25 basis point rate hike in July and hinted at a bigger increase in September to bring down inflation, which hit a record high 8.1% last month across the 19-country euro zone.
While the spike in energy prices is likely to pass over time, inflation is now spreading to a wide range of goods and services, raising the risk that it will get stuck at a relatively high level.
“The impacts of Russia’s brutal war are being felt around the world, and people are having to pay higher prices for energy and food,” Rehn said.