MNI BRIEF: Geopolitics Added Reason For ECB Gradualism: Rehn

Geopolitical tensions with Russia and their possible impact on already high energy costs mean it is even more necessary that the ECB take a cautious, gradual, sequential, but at the same time flexible approach to monetary policy normalization, Bank of Finland governor Olli Rehn said in a speech Thursday.

Rehn acknowledged upside risks to the inflation outlook, but said it was important not to react to short-term deviations from the ECB's symmetric 2% inflation target, unless they are expected to leave a more permanent mark on inflation. The factors currently driving price pressures are unlikely to lead to a prolonged inflation increase unless they cause significant second-round effects and a wage-price spiral, he said.