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Report: Finland central bank head urges ECB policy review amid weak inflation

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Report: Finland central bank head urges ECB policy review amid weak inflation

Finnish central bank governor Olli Rehn urged the European Central Bank to revisit its monetary policy framework amid muted inflation, Reuters reported.

"The interdependence of economic activity and inflationary pressures seems to have weakened in recent years," Rehn was quoted as saying. "Should this phenomenon prove to be lasting, it would imply a weakening of the impact monetary policy exerts on inflation via aggregate demand."

Annual inflation in the eurozone reached 1.5% in February from 1.4% in January, missing the ECB's medium-term inflation target of "below, but close to, 2%."

The ECB on March 7 pushed back its rate hike guidance and trimmed its 2019 growth and inflation projections for the eurozone.

Rehn said keeping interest rates low for longer may force the central bank to use unconventional tools, which have failed to stimulate inflation. He called for a review of the ECB's assumptions and monetary policy tools available.

Rehn, who is part of the ECB's governing council, is seen as a potential candidate to succeed ECB President Mario Draghi in 2019.