The European Central Bank can’t relent in its fight to tame inflation, according to Chief Economist Philip Lane.
(Bloomberg) — The European Central Bank can’t relent in its fight to tame inflation, according to Chief Economist Philip Lane.
“Price increases are still well above 2%, we are not at the inflation target yet and therefore there is still work to be done in terms of bringing inflation down,” Lane said at a conference in Vilnius, Lithuania, on Tuesday.
The ECB has raised borrowing costs in 10 consecutive increases and economists and markets expect the deposit rate to stay at its record 4% through the first half of 2024. Last week’s inflation numbers back up that notion, with consumer-price growth moderating to 4.3% and core inflation, which strip out energy and food costs, to 4.5%.
Lane acknowledged that getting inflation from that level to the ECB’s 2% target will take time — the ECB’s most recent forecast sees it hitting that level in the third quarter of 2025.
“We don’t expect the current low gas price to be maintained, we do expect to see gas prices go up from where they are now,” he said. “Energy has been such a volatile component, it’s going to be very important to us to keep an eye on energy in the coming months and years.”
Speaking at the same event, Lithuanian central bank chief Gediminas Simkus highlighted that inflation still faced many “lines of resistance.”
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