European Central Bank (ECB) Chief Economist Philip Lane emphasized the importance of transitioning to a forward-looking monetary policy once inflation aligns with the ECB’s 2% target. In an interview with the Financial Times on Monday, Lane noted that while the focus remains on bringing inflation down, services inflation still needs to decrease further before the central bank shifts its approach.
Lane explained that monetary policy should eventually be driven by risks rather than past data. As the disinflation process continues, the ECB will gradually reduce its reliance on economic data, with the new challenge being the assessment of incoming risks. He stressed that this will be done on a meeting-by-meeting basis.
Following Lane’s remarks, the Euro (EUR/USD) saw a 0.48% decline, trading at 1.0525.
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