MNI BRIEF: March, April CPI Key For ECB Rates After March-Lane

Inflation data for March and April will be key for setting European Central Bank rates after March, ECB chief economist Philip Lane said in a detailed speech Monday.

"The current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting, while the exact calibration beyond March should reflect the information contained in the upcoming macroeconomic projections, together with the incoming data on inflation and the operation of the monetary transmission mechanism," Lane said, pointing also to first quarter flash GDP and sentiment indices.

Wage growth is expected to be the main driver of euro area underlying inflation this year and next, with the pace of pay increases likely greater than that foreseen late last year, he said. (See MNI INTERVIEW: Risk EU Data Understates Wage Rises, Lobby says).

“The dampening of demand through the tightening of monetary policy means that price setters and wage setters are on notice that excessive price and wage increases will not be sustainable.” (See MNI INTERVIEW: German Postal Workers Key For Wage-Price Spiral).