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ECB's Rehn sees no second-round inflation, backs joint debt for defence - Finance news and analysis from Global Banking & Finance Review
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ECB's Rehn sees no second-round inflation, backs joint debt for defence

Published by Global Banking & Finance Review

Posted on September 17, 2026

1 min read

· Last updated: September 17, 2026

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Finance Banking Markets ECB Inflation Defense

ECB's Rehn: No Second-Round Inflation, Supports EU Joint Debt for Defence

ECB Policymaker Olli Rehn's Views on Inflation and EU Defence Funding

Current Inflation Situation in the Euro Zone

LONDON, Sept 17 (Reuters) - European Central Bank policymaker Olli Rehn said on Thursday there were no clear signs of second-round inflation effects in the euro zone and backed the use of jointly-issued debt for strengthening the region's defence capabilities.

Labour Market Conditions and Economic Monitoring

Comparison to Previous Years

Speaking at an event in London, Rehn said the same tightness was not evident in the euro zone's labour market as that witnessed in 2022 after the invasion of Ukraine and the post-COVID crisis, although the central bank was watching that, and other data, closely.

Political and Monetary Policy Considerations

Upcoming Elections and Policy Tools

He also said it was closely monitoring the "political scenery" in Europe ahead of elections in the likes of France next year, stressing the bank had a toolbox of "viable instruments" to ensure smooth transmission of monetary policy.

(Reporting by Marc Jones; editing by Amanda Cooper)

Key Takeaways

  • Rehn notes wage growth and inflation expectations remain moderate, with no clear second‑round effects emerging in the euro area, though he says risks—especially from energy—are being closely watched (econostream-media.com).
  • He advocates for jointly‑issued debt for defence spending, arguing it would strengthen Europe’s military capacity and financial architecture by creating a highly liquid, euro‑denominated safe asset (investing.com).
  • Rehn emphasizes vigilance amid geopolitical and economic uncertainty, noting that maintaining anchored inflation expectations and monitoring political developments—including upcoming elections—are vital for smooth monetary policy transmission (econostream-media.com).

References

Frequently Asked Questions

What is Olli Rehn's view on second-round inflation in the euro zone?
Olli Rehn stated there are no clear signs of second-round inflation effects in the euro zone.
How does current euro zone labour market tightness compare to previous years?
Rehn noted that the current labour market is not as tight as it was in 2022, following the Ukraine invasion and the post-COVID crisis.
What EU policy does Rehn support to strengthen defence capabilities?
He supports the issuance of jointly-issued EU debt to bolster the region's defence.
What tools does the ECB have to manage monetary policy transmission?
Rehn emphasized the ECB has a toolbox of viable instruments to ensure smooth monetary policy transmission.

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