Published by Global Banking & Finance Review®
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
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ECB's Olli Rehn warns of inflation risks and urges EU action on Ukraine funding using frozen Russian assets, while dismissing ECB involvement.
ROME, Dec 6 (Reuters) - Inflation in the euro zone faces downside risks in the medium term, even as price growth has returned to the ECB's 2% target, European Central Bank policymaker Olli Rehn said, according to a report in a magazine on Saturday.
The sharp drop from the October 2022 peak of 10.6% to around 2% currently was achieved without triggering mass unemployment or a severe slowdown, he told Italian financial magazine Milano Finanza.
"The good news is that inflation has stabilized around the ECB's symmetric 2% target, supporting real incomes in Europe," he said. "Our latest forecast suggests inflation will remain slightly below 2% over the horizon."
Rehn also urged EU leaders to resolve a stalled plan for a Ukraine "repair loan" funded by Russia's frozen assets, calling it "essential, even existential."
He dismissed speculation about ECB involvement, saying such a move would breach the EU Treaty's ban on monetary financing.
Instead, he backed a European Commission proposal under Article 122, often called the 'EU's emergency clause,' that gives the EU Council the power to adopt measures proposed by the European Commission in exceptional circumstances, bypassing the ordinary legislative process and the European Parliament.
"Every European should support using frozen Russian assets to help Ukraine," he said.
The Finnish policymaker, who has served in senior EU roles for decades, confirmed he would be a strong candidate for ECB vice president when the post opens next year.
"I have received encouragement from various parts of Europe," Rehn added.
(Reporting by Giselda Vagnoni, Editing by Bernadette Baum)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
The European Central Bank (ECB) is the central bank for the euro, responsible for monetary policy within the Eurozone. It aims to maintain price stability and oversee the euro currency.
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Downside risks refer to the potential for an investment or economic condition to perform worse than expected. In the context of inflation, it indicates the possibility of inflation falling below target levels.
Financial stability is a condition in which the financial system operates effectively, with institutions able to manage risks and absorb shocks without leading to systemic crises.
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