ECB’s Lane: All-Purpose Monetary Policy Rules for Inflation Deviations Are “Unhelpful”

9 January 2026

By Marta Vilar – MADRID (Econostream) – European Central Bank Chief Economist Philip Lane said on Friday that the appropriate monetary policy response to inflation deviations must be assessed case by case, arguing that fixed, all-purpose rules would not be helpful.

In a speech at the Danish Economic Society Conference in Kolding, Denmark, Lane said that heightened uncertainty made it especially important for the public to have confidence in the central bank’s commitment to price stability. For the ECB, he said, this requires a symmetric commitment to ensuring inflation stabilizes at the 2% target over the medium term.

Lane said that the ECB’s reaction to inflation misses should be shaped by their specific circumstances, including the source, size and persistence of the deviation.

“This means that it is unhelpful to seek out all-purpose monetary policy rules that set interest rates on the basis of a fixed relation to a small number of variables,” he said. “Rather, optimal monetary policy requires a nuanced, full-scale assessment of the underlying drivers of inflation and activity.”

Policy decisions, he added, should be guided not only by the most likely outlook for inflation and growth, but also by the balance of risks and prevailing uncertainty, making careful use of scenario and sensitivity analysis.