Lane: ECB monetary policy must respond to inflation deviations
Istanbul, December 4 (Hibya) – European Central Bank (ECB) Chief Economist Philip Lane emphasized that the ECB’s monetary policy must respond to “sufficiently large and persistent deviations” from the 2 percent inflation target.
Lane stressed that due to the lag in policy transmission, responding to short-term temporary deviations could “have a counterproductive effect.” He suggested that the ECB should decide how to respond to “moderate and somewhat persistent” deviations based on their source, adding:
“Such decisions should rely on a comprehensive and rigorous analytical framework that considers the evidence on the shocks causing the inflation deviations, as well as any signs that these shocks may evolve into broader inflation dynamics. Decisions must be based on data and made on a meeting-by-meeting basis.”
In October, the ECB left its key interest rates unchanged: the deposit facility rate remained at 2%, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.4%.
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