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ECB’s Rehn says rate changes will come ‘gradually’

The European Central Bank’s key interest rates will be adjusted gradually when they begin to change, said ECB policymaker and Finnish central bank chief Olli Rehn.
“Any adjustments to the key ECB interest rates will take place some time after the end of the APP net purchases and will be gradual,” Rehn said in Helsinki, referring to the bank’s bond-buying Asset Purchase Programme.

He added that the ECB’s decision to accelerate its exit from extraordinary stimulus was a compromise decision and left the bank with plenty of room to manoeuvre in case the outlook changes.

“It was a compromise and we all supported the decision unanimously, and I defend the decision,” said Rehn, who argued for caution in the weeks leading up to the meeting. “We maintain and in fact increase the freedom of manoeuvre.”

“In this kind of pervasive uncertainty… it’s always worthwhile to move in small, prudent steps and wait until the fog clears,” he said.

The ECB now guides markets for an interest rate increase “some time” after bond purchases end and Rehn said this could mean weeks or months, Reuters reported.

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