Energy Price Surge Brings Eurozone Inflation Closer to Adverse Scenario

Finland's Governor of the Bank of Finland, Olli Rehn, has expressed concerns about rising energy costs bringing inflation closer to the European Central Bank's (ECB) adverse scenario. Speaking at the ESRB conference in Frankfurt, he highlighted the resilience of the eurozone economy despite geopolitical tensions causing sharp increases in energy prices.

The ECB had projected a 0.9% growth for this year and 1.4% in 2027, along with a moderation of inflation from 3% expected for 2026 to 2.1% in 2028. However, Rehn warned that the increase in long-term interest rates will slow economic expansion and dampen the transmission of the energy shock to other prices and wages.

The rising uncertainty weighs heavily on international prospects, leading Rehn to caution about a possible sharp shift in market perception regarding artificial intelligence. An intense correction in valuations linked to AI could spread to stock markets and credit markets, further adding to risks.