ECB’s Lane: At some point, monetary policy needs to be driven by upcoming risks

• At some point, policy needs to be driven by upcoming risks rather than being backward-looking
• But that is once we are sure inflation is in line to hit 2% target
• There is a little bit of distance to go in that regard
• Services inflation needs to come down further
• Once disinflation process is completed, monetary policy needs to be forward-looking
• As data dependence falls down in priority, the new challenge will be to assess incoming risks
• That will still be done on a meeting-by-meeting basis
• Full transcript (may be gated)

Despite all the above remarks, he offers no comment when asked about when the transition might happen on this shift in policy thinking. He just says that in the next year, there will be a transition to “a more sustainable neighbourhood of 2%” for inflation.

This article was written by Justin Low at www.forexlive.com.