(Bloomberg) -- The European Central Bank isn’t fully convinced that price pressures generated in the euro area are sufficiently contained, according to Chief Economist Philip Lane.

“What we can mostly influence is domestic inflation” because “the ability of European firms to raise prices depends on monetary conditions,” Lane said in a lecture in Naples, Italy. “This goes back to why we still have some concerns. Domestic inflation is lower than at the peak around a year ago, but it’s still about 4%.”

The remarks come after policymakers including President Christine Lagarde signaled that July is probably too soon to lower interest rates for a second time, as more data are needed to show inflation is on a sustained path back to 2%. Strong wage increases have fed services costs in particular, keeping officials on edge.

Lane told Bloomberg TV this week that the latest inflation data won’t provide answers to the ECB’s lingering questions on underlying price pressures. The debate at this month’s Governing Council meeting will focus on the “economic side,” he said.

In Naples, he expressed optimism that wage growth will normalize in 2025, highlighting surveys among companies and forward-looking gauges.

“The reason why we think inflation will come down next year is that this is the last year of high wages,” Lane said. “Wage increases will look more normal.”

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