Central Bank governor and incoming ECB executive board member Philip Lane has said he is confident that current stimulus will be enough to guide the eurozone through what he considers “limited” downward revisions to the outlook.
Mr Lane, who is on track to replace ECB chief economist Peter Praet in June, said he doesn’t see Europe in a “super fragile situation”.
The comments may cool talk that the ECB could delay increasing interest rates for three more years because growth has slowed quickly in the eurozone in recent months.
Speaking at his European Parliament confirmation hearing, he argued that the recent deterioration in data will likely lead to “reasonably small adjustments” to macroeconomic forecasts, which the ECB will release at its next policy meeting in just over a week.
“The market is expecting the downward revisions in data to mean a slower path of normalisation — the current strategy can deal with that,” he said in Brussels.
“If you had a bigger shock or more persistent shock — so unemployment started to go up again and inflation started not only to go more slowly but actually to go into reverse — the current strategy also indicated that above all else we’re committed to reaching the target over the medium term,” he said.
“Although we’ve deployed certain instruments, I don’t think it’s anywhere near the case that the ECB has hit all limits,” Mr Lane said. The parliament’s Economic and Monetary Affairs Committee approved his candidature for the ECB board.
- Bloomberg; Irish Examiner