Euro zone inflation pressures have begun to ease, including for all-important core prices, but the European Central Bank will not end rate hikes until it is confident price growth is heading back towards 2%, ECB Chief Economist Philip Lane said
, including board member Isabel Schnabel and Dutch central bank chief Klaas Knot, have expressed concern core inflation could get stuck and perpetuate inflation.
Once rates plateau, the ECB plans to keep them there for some time and will not revise plans as soon as core inflation starts falling significantly, he said. "Actual goods retail prices are still very strong, but the intermediate stage has been a good predictor of price pressures," Lane said. Airlines, hotels and restaurants are better able to plan capacity than last year, which lowers the supply side component of price pressures.
"The supply shocks, on net, lower inflationary pressures," he said. "If you look further, to 2024, to 2025, the tightening of monetary policy has been significantly more than what was baked into the December forecast and that has to be factored into the new forecasts."
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