Lane: ECB will need to be restrictive all year
The European Central Bank (ECB) is on track to start cutting interest rates next month but will need to keep monetary policy in restrictive territory until 2024, according to chief economist Philip Lane.
In an interview with the Financial Times on Monday, Chief Economist Philip Lane noted that the ECB is on track to start cutting interest rates next month but will need to keep policy in the restrictive zone until 2024.
“With inflation visibly approaching target next year, ensuring that the interest rate falls to a level consistent with the target will be a different discussion,” Lane said.
On the other hand, a key wage indicator published last week also showed an acceleration in the first quarter. “The overall direction of wages still points to a slowdown, which is very important.” Lane said, adding that things will have ups and downs.
It was widely announced that monetary easing would begin at the next ECB meeting. However, markets expect policymakers to bypass interest rates in July and start cutting rates in September.
While this pause is in line with the comments of hawkish officials Joachim Nagel and Isabel Schnabel, most Board members remain silent on the issue.