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ECB’s Lane Says Disinflation in the Euro Area Is Well on Track

By Mark Schroers
Marcello Estevan, managing director and chief economist at the Institute of International Finance (IIF), left, and Philip Lane, chief economist of the European Central Bank (ECB), at the Institute of International Finance (IIF) during the annual meetings of the IMF and World Bank in Washington, DC, US, on Wednesday, Oct. 23, 2024. The International Monetary Fund lowered its global growth forecast for next year and warned of accelerating risks from wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession. (Kent Nishimura/Bloomberg)

(Bloomberg) -- Disinflation in the euro area is making progress, according to European Central Bank Chief Economist Philip Lane.

ECB policymakers have emphasized “high conviction that the disinflation process is well on track, but at the same time we have a projection of unemployment remaining low, of consumption growing, of investment recovering,” Lane said on Wednesday in Washington, adding that wage growth is “fairly strong.”

Speaking at the annual meeting of the IIF, Lane said that while some recent data have raised questions on growth projections, the economy in the 20-member region isn’t showing signs of “dramatic weakening.”

 

The ECB last week accelerated its monetary-policy easing with a first back-to-back cut in this cycle after inflation eased below the 2% target for the first time since 2021 and economic indicators pointed to weaker-than-expected growth.

Since then, policymakers have signaled that further rate reductions are likely but most have remained tight-lipped on the pace and extent. However, investors and economists are forecasting a flurry of cuts in the months ahead.

“We’re not pre-com committing to any particular rate path,” Lane said. “This may be a bit frustrating for someone who wants to know our kind of best guess at all points in time. But I think that the overriding commitment is that we’ll be agile and will be kind of responding in a systematic, a risk-adjusted way to what we see in front of us.”

Earlier on Wednesday, Governing Council member Christodoulos Patsalides told Bloomberg that the ECB has room to lower borrowing costs further as inflation approaches its target but must pay close attention to upside risks.

©2024 Bloomberg L.P.