European Central Bank Chief Economist Philip Lane said policymakers will remain flexible on interest rates as they assess how the recent decline in oil prices feeds through the economy, emphasizing that it is too early to draw conclusions about the inflation outlook. His remarks reinforce the ECB’s data-dependent approach ahead of the next policy meeting.
Lane told BloombergTV that the Governing Council is committed to “not boxing ourselves in” on the trajectory for monetary policy, leaving open the possibility of another rate increase if inflation pressures prove more persistent than expected. While acknowledging that “the oil market has moved quite a bit since the last decision,” he cautioned that policymakers need to “see how lower oil percolates across the economy” before adjusting their assessment of inflation risks.
Lane also suggested that confidence has yet to fully recover despite easing geopolitical tensions. “There has been some improvement in confidence but not to pre-war levels,” he said, adding that “there hasn’t been fast rethinking of investors and consumers.” He also noted that oil prices for 2027 and 2028 are still expected to remain above pre-war levels, indicating that the ECB continues to see medium-term energy costs as a factor supporting a cautious approach to monetary policy.
