Belgium, (Brussels Morning Newspaper) European Central Bank (ECB) chief economist Philip Lane expressed the belief that the bank is winning the fight against rising inflation.
Inflation pressures in the eurozone have started to ease, but the ECB will continue to up interest rates until it determines that inflation is on its way back to the target of 2%, Lane announced in an interview with Reuters on Tuesday.
Inflation in the eurozone is still above 8% and the ECB hopes to rein it in by continuing to up interest rates, which the bank raised by 3 percentage points in the period since July and announced further hikes.
“There’s significant evidence that monetary policy is kicking in… for energy, food, and goods, there’s a lot of forward-looking indicators saying that inflation pressures in all of those categories should come down quite a bit,” Lane noted.
Other ECB Executive Board members are less optimistic and have expressed concerns that core inflation could become entrenched.
Lane pointed out that, once ECB has upped rates sufficiently, it will keep them there for an extended period. “It could be quite a long-lasting period, a fair number of quarters,” he added.
Recently released data
Also on Tuesday, preliminary data from the Spanish National Statistics Institute (INE) showed that inflation continues to pick up pace in February.
Annual inflation stood at 6.1%, up from 5.9% in January and above 5.7% predicted by analysts who took part in a Reuters poll. According to INE, the main drivers of inflation in February were higher prices of electricity and food.
Core inflation in Spain stood at 7.7% in February, up from 7.5% in January.
Preliminary data from the French National Institute of Statistics and Economic Studies (INSEE) released on Tuesday shows that annual inflation increased from 7% in January to 7.2% in February.
ING Bank senior economist Charlotte de Montpellier noted “February data shows that French inflation has not reached its peak yet… given how underlying global inflation will probably continue to go up in the coming months, that will give further arguments to the European Central Bank to continue to raise rates beyond the first quarter.”