ECB Chief Economist Says Euro Zone Doesn’t Face ‘Chronic’ Inflation of 1970s
The situation we are in now is very different from the 1970s and 1980s, says Philip Lane.
(Bloomberg) --
European Central Bank Chief Economist Philip Lane said the euro region’s bout of “unexpectedly high” consumer-price increases doesn’t herald the sort of problem that global economies faced in the 1970s.
“If we look at the situation over the medium term, the inflation rate is still too low, below our 2% target,” he told Spanish newspaper El Pais in an interview published Monday. “This period of inflation is very unusual and temporary, and not a sign of a chronic situation. The situation we are in now is very different from the 1970s and 1980s.”
The remarks push a house view that was challenged in recent weeks by investors who appeared to doubt the ECB’s analysis on inflation, and its commitment to keep interest rates ultra-low next year. Last Monday, President Christine Lagarde openly stated that the conditions warranting such an increase in borrowing costs were “very unlikely.”
The Governing Council is also showing signs of a split on the outlook for prices. Lagarde has highlighted how officials are monitoring wages for signs of a shift in risks, though Lane insisted that there’s no sign of a threat so far.
“We will look out for unsustainable patterns that might lead to pressures that are undesirable from an inflation perspective,” he said. “But let me emphasize: we don’t see this right now. It’s more of a risk factor that we need to take a look at.”
Lane is due to make two public appearances later on Monday.
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