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ECB Must Be Ready to Move Policy Either Direction, Lane Says

  • Chief economist warns of war’s risks to both prices and growth
  • Range of tools also on hand to address fragmentation, he says
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The European Central Bank should be ready to adjust monetary policy in either direction as spiking energy costs and the conflict in Ukraine send inflation soaring but also weigh on growth, according to Chief Economist Philip Lane.

One of the ECB’s most dovish officials, he stressed policy makers’ extra room to maneuver after they weakened the link between withdrawing stimulus and the first increase in record-low interest rates. Lane said it’s important to maintain optionality, and for that optionality to be “two-sided.”