ECB’s Lane: Core Disinflation Slow; Need to Monitor Services

20 March 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Executive Board member Philip Lane on Wednesday said that core inflation was coming down more slowly than historically, which necessitated that attention be paid to services prices.

Speaking at the ECB Watchers Conference, Lane said that there was ‘a substantive issue now about services.’

The reversal of energy prices and the easing of bottlenecks were still playing a role, but it was necessary to see core inflation going further down, he said. ‘[S]o the disinflation is not just about wage deceleration.’

Even with a positive contribution of energy easing, there was still ‘a fundamental issue here about wages and prices’, he said.

The softening of the labour market was ‘visible’, he said. ‘We are seeing deceleration, but what we need to see is more.’

‘We will be calibrating for a long time to come the balance between the level of restrictiveness we need and the progress we see in outline inflation and wages’, he said.

It would be possible to get a clearer picture of the March and April data by June, he said.