ECB's Lane - Policy To Stay Restrictive For As Long As Necessary

ECB Chief Economist Philip Lane has stated, during a speech in NY, that the central bank will keep rates sufficiently restrictive for as long as necessary to achieve the 2% inflation objective in the medium term. He noted "The high level of two-sided uncertainty around the baseline means that we will remain data dependent in determining the appropriate level and duration of restrictiveness in our monetary stance.”

• Watch points for the central bank are wages and profit dynamics. There are signs that firms are absorbing rising wage pressures, which is a process that will have to continue for further disinflation in 2024.
• Lane wouldn't speculate on future balance sheet policy. Policy tightening is impacting the economy, particularly housing and business investment, but lag effects meant there was still considerable tightening to come.