ECB Lane: ECB still trying to reach neutral, not yet taking a stand on whether that will be enough
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The exchange rate channel is not significant enough to influence monetary policy the European Central Bank’s chief economist, Philip Lane said.
Earlier in the week, Lane said “our interest rate hikes will slow demand in the economy.”
”I would strongly warn firms not to expect the same level of profitability in times of high inflation.
Because of the war and the high energy prices, there are many indicators that the economy is going to slow down.
We are now making sizeable interest rates increases. This should make it clear to businesses and workers that demand conditions will become less favorable.”
Nevertheless, the euro has seen a significant turnaround on the back of a sell-off of the US dollar from 20-year highs into month end. A hot German inflation print has also underpinned renewed demand for the single currency that is trading some 0.5% higher on the day.
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