Christine Lagarde, President of the European Central Bank with former Governor of the Central Bank of Ireland, Philip Lane, now chief economist at the ECB, at the Euro at 20 Conferences Convention Centre Dublin last year
Professor Philip Lane has again defended his long-held view that the current, record-high inflation rate in the euro zone was temporary in the face of mounting pressure on the ECB to raise interest rates, both from investors and policymakers. https://t.co/1h31dzTxK7
— RTÉ Business (@RTEbusiness) February 10, 2022
Via RTÉ Business:
“Since bottlenecks will eventually be resolved, price pressures should abate and inflation return to its trend without a need for a significant adjustment in monetary policy,” Lane said in a blog post.
He was echoed at a separate event by French governor Francois Villeroy de Galhau.
They were likely trying to dampen market expectations, which are for an early end of the ECB’s bond purchases and rate hikes worth 50 basis points by December.
These were stoked by ECB President Christine Lagarde last week, when she refused to rule out a rate increase this year. Sources told Reuters some policymakers already wanted policy changes at last week’s meeting.
But Philip Lane defended the ECB’s “hold-steady” approach.
“The logic underpinning a hold-steady approach to monetary policy is reinforced if the bottlenecks are primarily external in nature, caused by global disruptions in supply or a surge in global demand,” he said.