HELSINKI, April 21 (Reuters) - The European Central Bank
should maintain a tightening monetary policy that restricts
demand, Finnish central bank Governor Olli Rehn said in a speech
on Friday.
"In monetary policy, we have moved into an area that
restricts aggregate demand, and there is no reason for us to
abandon it or exit it prematurely," Rehn said.
He warned, however, against a return to economic "shock
therapy" seen in the early 1980s of sharply higher rates,
arguing instead that inflation can be brought down by less
strict means.
"The path to sustainable growth is narrow, but it can be
traversed with a proactive, balanced policy," Rehn said.
"In this way, we can achieve our goals without causing
unnecessary costs to the economy - also because now the central
banks are independent and not subject to political pressure, as
in the 1970s."
(Reporting by Anne Kauranen, editing by Terje Solsvik)
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