ECB’s Lane: Remarkably stable baseline leaves no near-term rate debate

ECB Chief Economist Philip Lane said the Eurozone is now in a “remarkably stable situation,” arguing there is “no near term interest rate debate” under the central bank’s baseline scenario. Speaking in an interview with La Stampa, Lane said the current policy setting is consistent with inflation staying around target, growth close to potential, and low, declining unemployment.

Lane stressed that the current level of interest rates provides the baseline for “the next several years.” With the economy expected to grow in the neighborhood of its potential rate, he said it would take a significant acceleration in activity to push outcomes meaningfully above the baseline and trigger a policy response.

One alternative scenario he flagged was a major global disruption similar to 2021–2022, involving supply-chain bottlenecks. Lane described this as a “nightmarish” outcome, noting it would also carry recessionary forces rather than a clean inflationary impulse.