'We haven't reached the corner yet' — ECB's battle with inflation at crucial stage
ECB chief economist Philip Lane said they won't be given an indication when rate hikes might end because it gives a "sense of certainty which doesn't exist".
The European Central Bank’s (ECB) battle with inflation is nearing a crucial stage but more work needs to be done as its chief economist warns that we haven’t turned the corner yet.
The ECB is due to meet again next month where another 0.25% increase in interest rates is on the cards as inflation remains stubbornly high. Following the increase earlier this month, interest rates now stand at 3.75%.
During a conference in Dubrovnik, Croatia, Philip Lane, ECB chief economist, said there is still momentum in rising goods and food prices stressing that uncertainty remains “pretty high.”
“We expect to turn the corner, but I wouldn’t say we reached that corner quite yet,” he said on Friday.
Mr Lane added that the ECB should not try to predict where interest rate hikes need to end given the uncertainty inflation is presenting.
He said the Governing Council of the ECB has chosen not to give a “terminal rate” that interest rates might reach because “it conveys a sense of certainty which doesn't exist”.
Officials have raised interest rates at the fastest pace in ECB history to counter runaway inflation in the wake of Russia’s war in Ukraine.
While price gains are well down from their record, underlying pressures that exclude food and energy costs remain elevated and have become the key focus for policymakers in Frankfurt.
Some suggest hikes may need to persist beyond the two quarter-point moves that economists and investors widely expect in June and July to complete the monetary-tightening campaign.
Dutch central bank chief Klaas Knot said borrowing costs should stay at their peak there for a “significant” period of time.
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