The European Central Bank (ECB) will maintain flexibility in its interest-rate decisions, rejecting any pre-set schedule for future adjustments, according to Governing Council member Olli Rehn. Speaking at an OMFIF event in London, Rehn said energy prices remain the primary driver of euro-area inflation volatility, while the shock has not yet generated a wage-price spiral or widespread domestic price pressure. He noted that wage growth has eased and broader evidence of inflation persistence remains limited. The ECB adjusted policy rates at its September meeting, and Rehn emphasized that the Governing Council does not pre-commit to a specific rate path, judging each decision against new economic and financial information.
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He warned that geopolitical disruption continues to pose upside risks to inflation and that monetary policy cannot resolve physical supply bottlenecks, but it is essential to prevent external price shocks from becoming embedded in inflation expectations. GlobalData TS Lombard macroeconomist Davide Oneglia wrote that a material worsening in European energy supply could lead to one or two ECB rate rises occurring earlier than previously anticipated, with December the most probable window for the next increase and the projected terminal rate at 3% for now. Rehn also cautioned against broad, untargeted energy subsidies, arguing they distort price signals and strain public finances, while noting that targeted assistance for vulnerable households may be appropriate during sharp price spikes.