ECB Chief Economic Philip Lane said in an interview, “right now, clearly inflation is a huge issue across Europe, absolutely.” But he added, “this essentially is an imported inflation shock, it’s a supply shock… we would still maintain … most of this inflation will fade away”.
“We do think that inflation will decline later this year and will be a lot lower next year and the year after compared to this year,” he added.
“There are mixed signals coming through… some indices are showing upside concern for energy prices and other indices are showing downside concern for activity levels through the sentiment channel.”
“In March we had an inflation outlook which was getting close to 2 per cent. If that outlook is maintained, we will be looking to end net purchases in the third quarter. If it weakens, or if financing conditions deteriorate, that would be inconsistent with delivering that action. Then we would have to think again,” Lane added.
