Lane: Still Expect Eurozone Inflation To Ease Next Year

Eurozone inflation will ease next year and there is no sign that investors or consumers expect runaway prices in the medium term, the European Central Bank’s chief economist said on Thursday.

“We’re not seeing expectations de-anchoring to the upside,” Lane told an online event hosted by the U.S. Federal Reserve.

“Right now we do have this diagnosis that inflation will decline through the course of next year”, Lane added.
Philip Lane also noted that bottlenecks are not expected to get worse and, from here, will ease. Lane added that he is not seeing inflation expectations moving above the ECB’s target. For reference, the most commonly cited measure of Eurozone inflation expectations, the Euro 5-year forward inflation-linked swap, is trading just to the south of the 2.0% level, which is the ECB’s symmetric inflation target.

Finally, Lane said he expects a pick-up in wage dynamics. As for market reaction, nothing new from ECB’s Lane. EUR/USD has not seen any reaction to the comments and continues to trade in the 1.1340 area, up by about 0.2% on the day as the broad dollar rally takes a breather.