ECB Chief Economist Philip Lane indicated that although there is “some progress” in mitigating underlying inflationary, he is not fully convinced of the sufficiency of these efforts to date.
“This is why we are in this period now of holding interest rates at a significantly high level until this process makes further progress,” Lane explained,
Lane also conveyed his reservations about the steep decline in headline inflation numbers, attributing the fall primarily to the base effect from last year’s energy price surges.
Looking ahead, Lane projected that the descent in inflation rates might pause, with inflation likely hovering in the “high twos or low threes” range in 2024.
He anticipates that a reversion to the ECB’s desired 2% inflation target would not materialize until 2025, suggesting a prolonged journey ahead for the central bank in its fight against persistent inflation.
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