The European Central Bank should accumulate data before each interest rate cut given the great uncertainty that surrounds the economic outlook, ECB chief economist Philip Lane has said.
The ECB has dropped strong hints that it will start lowering its policy rate from a record 4% next month in light of a sharp drop in inflation.Professor Lane said the ECB should avoid fuelling"unwarranted expectations" about rate cuts and mentioned the ECB's economic forecasts, which are published once a quarter, as a reference point.
"In particular, moving from one meeting to the next meeting and from one projection round to the next projection round allows for the accumulation of further data that can help inform the rate decision," he said. Investors have pared back their bets on ECB rate cuts this year after surprisingly strong inflation in the United States. They now only expect two or three ECB cuts by December, down from four a couple of months ago.
Business European Central Bank Inflation Interest Rates Philip Lane
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