Central Banks
ECB Recalibrating Rates Too Fast Self Defeating, Lane Says
- Policymakers and markets are at odds when rate cuts will start
- ECB chief economist comments in Corriere della Sera interview
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Lowering borrowing costs too early could thwart the European Central Bank’s monetary policy, according to Chief Economist Philip Lane.
“A false dawn, too rapid a recalibration, can be self-defeating,” Lane told Corriere della Sera in an interview published Saturday. “The history of high inflation episodes tells us that if central banks try to normalize too quickly, before the problem is really conquered, then we get another inflation wave, and then another wave of interest rate hikes. That would be a far worse scenario.”