23:27:59 02-05-2024
ECB's Lane: Inflation has declined quicker than expected
While giving a virtual guest lecture at the University of Stanford, European Central Bank (ECB) Chief Economist Philip Lane noted that while inflation has declined at a faster pace than the ECB had initially expected, policy transmission continues to lag, and tightening effects from previous rate increases continue to unfold.
Key highlights:
- The ECB is not pre-committing to any particular rate path.
- The ECB will continue to follow a data-dependent approach.
- Expectations of future inflation continue to normalize, and leaving nominal rates unchanged implies a mechanical increase in real rates.
- Policy rates will stay restrictive for as long as needed.
- Inflation has declined more quickly than expected.
- Wage growth is moderating, but remains elevated.
- The next phase of the disinflation process likely more gradual.