Phillip Lane, the European Central Bank‘s Chief Economist, addressed the Asian Financial Forum (AFF) 2025 in Hong Kong on Monday, offering insights into Europe’s economic outlook and the ECB’s monetary policy.
Lane discussed the ongoing recovery of the European economy, still grappling with the aftermath of the pandemic. He outlined the ECB’s baseline expectation of continued recovery, with consumption expected to improve in 2025.
However, Lane acknowledged the complexity of the ECB’s approach to inflation control. For inflation to sustainably reach the ECB’s target of 2%, services inflation, currently at around 4%, would need to decline further. He emphasized the need for the ECB to strike a delicate balance in its policy approach this year, aiming to avoid both overly aggressive and overly cautious actions. Additionally, he stressed the importance of ensuring the economy does not slow too much in the process.
In response to Lane’s comments, the euro came under renewed pressure against the U.S. dollar, falling by 0.26% and testing the 1.0200 level.
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