ECB’s Lane: Need Time to Get Transition from Holding to Easing Right

14 March 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Executive Board member Philip Lane on Thursday said that it was necessary to take time to ensure that the shift in the ECB’s monetary policy stance was done correctly.

In an interview with CNBC, Lane said that the Governing Council must ‘take our time to get that right from moving from holding to dialing back restrictions. So it’s clear that we have a lot of confidence, a little more data will help us to build sufficient confidence in the coming weeks.’

The March Governing Council meeting was ‘an important milestone in evidence accumulation’, he said.

‘[W]e were able to look back and to see that the disinflation process has been ongoing, we continue to make progress, continue to move towards our 2% target. So absolutely a lot of evidence is accumulating.’

If there was enough confidence about the process, the change in the monetary policy stance would be quicker, he said.

‘So we have a fairly stable view that we are on our way back to 2%, but I think that we have the time to validate that to see some more confirmation – especially in those segments, it’s not so much over core inflation, I think, but in the services component –  and we do have some time to see further validation’, he said. ‘Because it’s important to get that initial transition away from holding towards dialing back restrictions, to get that right.’

Asked about whether rate cuts were more likely in June, he said that the ECB considered quarters from a macro point of view, which was the reason why he wouldn’t analyse April versus June.

‘I think that Q2 is a time when we will be far enough into 2024 to see more of the wage dynamic, to see more of the price pressures. So we will learn some more by April, we will learn a lot more by June’, he said.