Philip Lane, Chief Economist of the European Central Bank (ECB), conveyed on Monday that recent Eurozone economic indicators have bolstered his confidence in inflation returning to the ECB’s 2% target. This sentiment raises the likelihood of an initial interest-rate reduction in June, as reported by Bloomberg.
Lane remarked, “Both the April flash estimate for euro area inflation and the Q1 GDP number that came out improve my confidence that inflation should return to target in a timely manner.” He added, “So, as of today, my personal confidence level has improved compared with our April meeting. But of course, more data will arrive between now and June.”
However, Lane cautioned against overemphasizing the impact of the US economy and interest rates on the Eurozone, noting their differing effects and mechanisms. He emphasized the importance of assessing the situation on a month-by-month basis while acknowledging the prevalence of geopolitical tensions in the longer term.
Despite Lane’s remarks, the market response to the Euro has been subdued, with the EUR/USD pair trading marginally higher at 1.0763, marking a modest 0.02% increase for the day.
