Topical discussion with EU Ambassadors on the conundrums the economic policy faces today. Monetary and fiscal policies need to do their jobs to contain the cost-of-living crisis with the tools and space available.
Read my full remarks:
https://www.suomenpankki.fi/fi/media-ja-julkaisut/puheet-ja-haastattelut/2022/governor-olli-rehn-european-economic-policy-in-the-times-of-crises-rules-discretion-and-coordination/ 1/
Coordination between fiscal and monetary policy was successful during the pandemic. Even though now policy targets may seem somewhat contradictory, policy-makers would be wise to consider interdependencies of different policy areas. 2/
By tightening monetary policy, the risk of a detrimental wage-price spiral will be reduced and #inflation will be stabilised at 2% over the medium term. We at the @ecb Governing Council have the resolve and tools to achieve that goal. 3/
The energy crisis is putting policy-makers under pressure to find measures to help people to cope with elevated prices. It would however be wise to implement measures that also help reducing dependency on the fossil fuels and work in favor of the green transition. 4/
I expect recent @EU_Commission proposal to bring more realism to the economic governance framework, as well as more clarity and national ownership for the implementation. /6
https://www.suomenpankki.fi/fi/media-ja-julkaisut/puheet-ja-haastattelut/2022/governor-olli-rehn-european-economic-policy-in-the-times-of-crises-rules-discretion-and-coordination/
Generous fiscal policy support, just after heavy fiscal input for the Covid-19, will put fiscal sustainability once again in question. Policy-makers would be better off with a firm, rules-based framework supporting fiscal sustainability. 5/
🐦🔗: https://nitter.eu/ollirehn/status/1597274688128180226