ECB's Lane Stresses Forward-Looking Approach for Monetary Policy

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ECB Chief Economist Philip Lane emphasized that future monetary policy decisions should be based on emerging risks rather than recent economic data. In an interview with the Financial Times, Lane explained that once the disinflation process is completed, the ECB needs to focus on potential future shocks that could influence inflation.

He pointed out that although the overall inflation rate has approached the ECB's 2% target, there is still some progress needed, particularly in curbing services inflation.

Lane's comments come as Eurostat data revealed that inflation in the eurozone rose to 2.3% in November, up from 2.0% in October. This increase, while in line with market expectations, strengthens the argument for a more cautious approach to interest rate cuts in the upcoming months. As inflation transitions from disinflation to a focus on maintaining the 2% target, Lane noted that keeping inflation steady will become a new challenge.

The ECB has already reduced rates three times this year, with many investors expecting further cuts and policy easing at future meetings through at least June 2025.

Paraphrasing text from "Reuters" all rights reserved by the original author.