Rehn warns energy prices keep euro area inflation above target
Bank of Finland Governor Olli Rehn said energy prices were keeping euro area inflation above target while growth remained resilient. He spoke at the Citi Macro Forum in Bangkok on October 14, 2026.
Energy pressure without broad inflation
Rehn said euro area inflation remained above target mainly because of energy prices, but price pressures were not broad-based.
Wage growth was moderate and second-round effects remained limited, although upside risks had increased.
Monetary policy cannot supply oil or reopen shipping lanes; its task is to prevent temporary shocks from becoming embedded in expectations and wage-setting.
In September, the European Central Bank (ECB) raised its growth forecast to slightly below 1 percent in 2026 and around 1.5 percent in both 2027 and 2028.
Defence spending, infrastructure investment, improving consumer confidence and AI-related activity supported demand.
Middle East conflict and volatile energy prices continued to cloud the outlook.
Clean electricity meets computing demand
Finland's improved outlook reflected stronger exports, its main growth driver, and data centre investment supporting clean electricity, digital infrastructure and services.
Electricity production was 96 percent fossil-free.
Rehn said Europe's AI gains depend on broad adoption, not invention alone, given its difficulties scaling innovation.
Skills, human capital, infrastructure and reliable energy support productivity and competitiveness.
Rapid innovation also carries risks of capital misallocation, valuation corrections and financial market volatility.
Stability cannot substitute for capacity
Rehn identified three tests for Europe: security, energy resilience and productivity.
He called for defence cooperation, deeper capital markets and fewer barriers to entrepreneurship and technological diffusion.
Monetary policy can underpin those efforts, but cannot deliver structural change itself.