Lane Says ECB Will Decide to Launch Policy Review Fairly Soon
Lane Says ECB Will Decide to Launch Policy Review Fairly Soon
(Bloomberg) --
The European Central Bank is nearing a decision to launch a review of its policy strategy, chief economist Philip Lane said Wednesday, as officials struggle to boost inflation despite years of massive stimulus.
The review will need to have a clear focus to be successful, he told a meeting of students in Milan, signaling the final decision on its design will be made after the arrival of two new Executive Board members early next year.
“We will make decisions fairly soon,” Lane told the audience. “But I think we need to take our time a little bit to design the review. The best type of review has a clear focus, knows its ambitions, and it’s not so extensive that it becomes impossible to conclude.”
It’s too early to give the exact launch date, he added.
By starting a review, the ECB will follow the path of the U.S. Federal Reserve, which been going through an extensive rethink of its policy since November 2018. The last time the ECB conducted such an exercise was 16 years ago and some policy makers have argued that the experience of the debt crisis and years of persistently low inflation warrant taking a closer look at its strategy.
A number of Governing Council members have in recent weeks come out in favor of launching the review, including the ECB’s new president, Christine Lagarde. Speaking shortly before she took office at the beginning to November, Lagarde said a review would be one way to heal the split among her colleagues that opened up over the recent stimulus decision.
In September, the ECB decided to cut rates deeper below zero and to relaunch its quantitative-easing program, pledging to keep buying assets until inflation is firmly within its target.
With discussion likely to focus on how the ECB is targeting inflation, Dutch governor Klaas Knot recently floated the idea of introducing a band around the current aim of just under 2%.
His French colleague Francois Villeroy de Galhau believes policy makers need to figure out how to communicate their goal to companies and consumers so they can better adjust expectations.
“With so many questions people are thinking about, we have to decide what are these questions that we deal with under day-to-day business,” Lane said. “One question is: What are the strategic topics, what are we going to focus on?”
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To contact the reporters on this story: Alessandro Speciale in Rome at aspeciale@bloomberg.net;Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Robert Jameson
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