ECB's Rehn: Rising Bond Yields to Curb Energy Price Pass-Through, Slow Growth

European Central Bank policymaker Olli Rehn said on October 6, 2026, that the recent surge in long-term bond yields is likely to dampen energy price pass-through to other goods and wages while weighing on euro zone growth. Yields have climbed to more than decade highs across the bloc, partly tracking U.S. yields and partly on rising debt sustainability concerns in Europe. Euro zone inflation remains well above the ECB's 2% target, and policymakers are debating the scale of further rate hikes after two increases last summer. Rehn declined to signal a policy step, adhering to the ECB's stance of not pre-committing ahead of decisions. Markets currently price two to three more ECB hikes this cycle, including an 80% probability of a move by December. He also noted the economy remains exceptionally resilient, partly on strong artificial intelligence investment, a factor some policymakers cite as evidence of persistent price pressures.