The ECB should make future monetary policy decisions based on upcoming risks and not the latest economic data, ECB Chief Economist Philip Lane told the Financial Times in an interview published on Monday.
“Once the disinflation process is complete, I believe that monetary policy needs to be fundamentally forward-looking, and scan the horizon for new shocks that may lead to less or more inflationary pressures,” Lin stressed.
He said that while overall inflation had fallen to close to the ECB’s 2% target, there was “a short way to go” and services inflation needed to slow further.
Eurostat data showed euro zone inflation accelerated in November to 2.3%, which is above 2.0% in October but in line with market expectations and adds to the case for cutting interest rates more cautiously next month.
“At some point, we will move from being driven by the very important challenge of deflation to the new challenge of keeping inflation at 2% on a sustainable basis,” Lin added.
The European Central Bank has cut interest rates three times this year, with investors betting on a steady stream of interest rate cuts and policy easing at each meeting at least until June.
