ECB’s Lane: Must ‘Make Sure That Any Deviation We See Does Not Become Embedded’

1 July 2025

ECB’s Lane: Must ‘Make Sure That Any Deviation We See Does Not Become Embedded’
Philip Lane, chief economist of the European Central Bank, at the 5th Joint BoC - ECB - NY Fed Conference in Frankfurt on October 2, 2024. Photo by Bernd Roselieb for ECB under CC BY-NC-ND 2.0.

By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Philip Lane on Tuesday said that the inflation cycle was over but indicated that this did not mean monetary policy’s job was done.

In an interview with CNBC in Sintra, Portugal, Lane said, ‘We do think the last cycle is done, so bringing inflation down from the peak of 10[%], back to 2%, that element is over, but on a forward-looking basis we do have to stand ready to make sure that any deviation we see does not become embedded, does not change the medium-term picture.’

The cycle was over in the sense that the 2021 and 2022 inflation shocks had been countered, he explained. Still, there were ‘new shocks hitting the system’, so that ‘there might be some cyclical movements a bit lower’ still, he said.

This could be driven by energy market developments, exchange rates and inflation expectations, all of which were being monitored, he said. The ECB wanted to avoid overreacting to small inflation deviations, he said, but was also on the lookout for medium-term changes in the outlook as well as ‘persistent’ elements affecting Europe’s economy.

Lane denied that the recently completed strategy assessment would have any effect on the monetary policy meeting later this month.

‘I can tell you the implication for July is zero’, he said. ‘This is a five-year strategy.’