The European Central Bank is ready to cut interest rates next month but policy must continue to be restrictive this year as wage growth will not normalise until 2026, ECB chief economist Philip Lane told the Financial Times today.
The chief economist of the European Central Bank has given a strong signal that barring something unforeseen arising between now and when its Governing Council meets next week, the ECB should be in a position to begin cutting interest rates.
"Now I think, at a turning point, it has been reasonable for us in the last few weeks to basically signal that barring major surprises many people on the Governing Council, including myself this morning, have indicated there may be enough in the data to say we can remove the top layer of restrictiveness," he stated.
"It is not completed now, so the discussion about having a rate cut next week, it is not a declaration of victory," he stated."We can maybe remove the top level of restriction, but we are not going to have a normal situation this year," he added."My personal opinion which is that we should not pre-commit, we should go meeting by meeting, we should let the data help us," he said.
He said many considerations will be relevant, with the pace of cuts likely to be slower if there are upward surprises in inflation and demand level.
Business European Central Bank Inflation Philip Lane Euro Zone Interest Rates IIEA Isabel Schnabel
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