ECB’s Lane: May decision will depend on three factors

Delivering a university lecture in Cyprus, European Central Bank (ECB) Chief Economist Philip Lane said that the “May decision will depend on three factors.”

Additional comments

It will depend on the inflation outlook.

Then, we have to diagnose the underlying dynamic, not just the overall inflation rate.

And through that, assess how quickly inflation is going to fall.

Thirdly, is how quickly these interest rate increases are restricting the economy and bringing down inflation.

For these reasons, we have no longer indicated or pre-announced what the expectation is for the next meeting or for the upcoming meetings.

The focus should be on understanding every data point that comes in.

If, by the time of the May meeting, projections remain on track, then a rate hike will be appropriate.

Supply side of economy seen recovering in next couple of years.

Food is where inflation is at its most intense.

Sees big debate this year on services inflation.

Market reaction

Lane’s remarks fail to move the needle around the Euro, with EUR/USD keeping its range at around 1.0900. The pair almost unchanged on the day.