Lane Again Says More Disinflation Needed Before Confidence In Reaching Target

The final sentence of ECB Chief Economist Lane's prepared remarks echo the rhetoric from his Jan 31 comments: "In terms of an overall evaluation of our policy trajectory, we need to be further along in the disinflation process before we can be sufficiently confident that inflation will hit the target in a timely manner and settle at target sustainably". Bunds are relatively unmoved as a result. Other points of note from the speech:

• Lane points to several factors in the ECB's projections will likely push up inflation momentum in the coming months: The impact of wage costs, the recovery of domestic and external demand and expiration of fiscal measures.
• He notes that various forward-looking and survey-based measures of wage growth point to a decreasing profile in 2024, but still stresses that the compensation per employee measure from the national accounts is most comprehensive even though it is released with a 1/2-month lag.
• Lane caveats that the underlying inflation measures used by the ECB may "not send reliable signals about medium-term inflation dynamics", due to the impact of the "scale and breadth of the energy shock and the pandemic- and war-related shocks".