(Bloomberg) -- Inflation data for last month won’t provide answers to the European Central Bank’s lingering questions on underlying price pressures, according to Chief Economist Philip Lane.

Speaking to Bloomberg TV, he joined President Christine Lagarde in signaling that another cut in interest rates in July is unlikely, calling for patience in collecting evidence that the ECB is heading toward its 2% target.

“Really the questions for the July meeting are going to be on the economic side,” Lane told Bloomberg Television on Tuesday. 

“The June inflation data, we still have questions on services inflation,” he said on the sidelines of the ECB’s annual forum in Sintra, Portugal. “These data do not settle that.”

What ECB Officials Are Saying at Sintra...

  • Lithuania’s Gediminas Simkus: “Expectations for two more cuts this year are in line with my own thinking, if data evolve as expected” — more here
  • Belgium’s Pierre Wunsch: “The first two rate cuts are relatively easy as long as inflation hovers around 2.5% because we will still clearly be restrictive” — more here

After having lowered borrowing costs for the first time last month, officials are cautiously weighing the possibility of further reductions. They are particularly attentive to services inflation and wage growth as key drivers of future price developments.

Eurostat will publish a first estimate for inflation in June later Tuesday, with economists surveyed by Bloomberg expecting it to slow to 2.5% from 2.6%.

Lagarde said Monday that the ECB is still facing several uncertainties over inflation, and it will take time to gather sufficient data to be “certain that the risks of above-target inflation have passed.”

“The key is really services inflation. What we’ve seen in the last days is that services inflation remains the outlier, and what we need to see is whether higher services inflation is a backward element and is a legacy of the rapid disinflation or is it a persistent element,” Lane said. “We need time to work on it.”

Turning to the political upheaval in France, Lane said he doesn’t see any signs of disorderly market shifts that may warrant action by the ECB. 

“It is clearly natural in an election for the market to reprice,” he said. “There are elections all the time, there are movements in spreads all the time. Of course, France is an important country, but this looks like an ordinary repricing to me.”

--With assistance from Joao Lima and Marilen Martin.

(Updates with more quotes from Lane in last two paragraphs.)

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