The Chief Economist of the European Central Bank (ECB), Philip Lanesaid on Thursday that monetary policy measures are clearly tightening financial conditions, Reuters reported.
“Much of the final impact on inflation of our policy actions to date is still in the making“, Lane added. “Over time, our monetary policy will ensure that inflation returns to our target in a timely manner.”
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“The signal from the models points for the most part to a strong and orderly transmission of the ECB’s policy adjustment to the relevant financial and real variables.”
“You have to be open-minded about the precise scale of monetary policy tightening that will be necessary to achieve this result.”
“The calibration of the Monetary policy stance should be reviewed regularly based on incoming information on underlying inflation.”
“The models suggest that reducing our asset portfolio by a normalized cumulative reduction of €500 billion over 12 quarters helps reduce inflation by 0.15 percentage points and output by 0.2 percentage points.”
“It is estimated that the adjustment has already reduced inflation by around 0.2 percentage points in 2022.”
“Inflation is estimated to drop around 1.2 percentage points in 2023 and 1.8 percentage points in 2024 as a result of the adjustment.”
“A significant amount of excess savings could cushion the transmission of higher policy interest rates to the economy and inflation.”
market reaction
EUR/USD remains lower on these comments and the pair is down 0.2% on the day at time of writing, trading at 1.0670.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
