Eurozone Inflation Remains Too High, ECB Chief Economist Warns

Philip Lane, Chief Economist and Executive Board member of the European Central Bank (ECB), emphasized that eurozone inflation remains 'too high' at its current rate of 3%. This figure is one percentage point above the ECB's policy target of 2%, but significantly lower than the double-digit levels seen in October 2022 when it peaked at 10.6% year-on-year.

Lane noted that while inflation has decelerated amid the ECB's rapid rate hikes and stabilizing energy prices, a return to the target is expected to take more time. He also highlighted that wage pressures and sticky services prices are the main risks to price stability in the fight against inflation.

In his speech at an event in Ireland on the 18th, Lane pushed back against market speculation of early rate cuts, saying that the ECB is not yet at a stage where it can ease its tightening stance. A majority of market participants expect the ECB to hold policy rates steady at its next meeting.