At its meeting last week, the Governing Council of the ECB decided to continue its accommodative monetary policy stance. Monthly securities purchases to the value of EUR 60 billion will continue at least until the end of the current year. They will continue beyond this date if inflation is not observed to be sustainably approaching the price stability objective. The Governing Council does not expect to raise its key policy rates for a considerable time.
The current monetary policy stance has clearly bolstered economic growth and supported improved employment throughout the euro area, including Finland. 'Economic performance is, however, not yet sufficiently strong to raise euro area inflation in line with the monetary policy objective. This is why the ECB will need to continue to pursue a very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2%,' said Bank of Finland Governor Erkki Liikanen today at the press briefing for the release of the latest issue of the Bank's journal Euro & talous.
'In Finland, economic growth has strengthened following several weak years, and growth is forecast to continue. At the same time, economic activity has become more broad-based. Exports have started to increase, while the growth in domestic demand continues', observed Governor Liikanen.
Although the outlook for the Finnish economy has brightened, the situation remains vulnerable. Export earnings are still below the level of 2008, the industrial base has narrowed and the number of industrial jobs has declined exceptionally steeply. A substantial reduction in the general government deficit is not forecast.
The measures taken in recent years to strengthen the economy have been important. The Competitiveness Pact, the measures taken to balance the public finances and the pension reform decided in 2015 have made a positive contribution to improving the economic outlook.
'The economy has turned. In order to make this turn sustainable, further measures are needed. Cost-competitiveness needs to improve even after the expiration of the Competitiveness Pact. Additional measures will be needed to strengthen the public finances. Further structural reforms are vital in improving the conditions for economic growth,' Governor Liikanen underlined.
Forecast for the Finnish economy will be published in English in the end of June at www.bofbulletin.fi.