European Central Bank Chief Economist: The return of inflation to the 2% target is "basically complete"

According to the Zhitong Finance APP, Philip Lane, the Chief Economist of the European Central Bank (ECB), stated in London on Tuesday that although prices remain high in certain areas, the overall process of bringing inflation down to the 2% target is "basically complete." "Overall inflation is now close to the target level, but inflation in the service sector still needs to decline further," Lane pointed out. "However, sufficient progress has been made in reducing inflation, and it can be considered that this monetary policy challenge has been largely completed." Lane's optimistic remarks provide a basis for the ECB to pause further interest rate cuts. Since June of last year, the ECB has cut rates consecutively eight times, with a total reduction of 2 percentage points, and the current deposit rate has fallen to 2%. Although the ECB is satisfied with its achievements in controlling inflation, the economic outlook still faces many risks, particularly changes in U.S. tariff policies, as well as the escalation of the war in Ukraine and tensions in the Middle East. Trade negotiations between the Trump administration and the EU are ongoing, with the next round of talks scheduled before the deadline on July 9. ECB President Christine Lagarde reiterated on Monday that the ECB has enough room to respond to uncertainties at the current interest rate level. She also warned that tensions in the Middle East could disrupt energy supplies and push prices higher, which is worth monitoring. Earlier on Tuesday, Peter Kazimir, the Governor of the Slovak Central Bank, also issued a warning, pointing out that recent developments have once again exposed the vulnerability of the current inflation situation, emphasizing that "vigilance must be prioritized." However, ECB Vice President Luis de Guindos stated that recent fluctuations in the commodity markets have not changed the ECB's overall outlook on inflation. Lane indicated that the ECB's policy focus is currently shifting from suppressing inflation to addressing a series of new challenges, particularly protecting the medium-term inflation target from the highly uncertain international trade outlook. He noted that this uncertainty includes not only the reconfiguration of tariff systems but may also encompass more non-tariff barriers, the deep intertwining of economic and security policies, and potential adjustments to the treatment of foreign securities investors and foreign direct investors. Lane emphasized: "We need to ensure that, against the backdrop of an evolving global trade landscape, the inflation target remains achievable, and the monetary policy framework can adapt to a more complex international situation."