European Central Bank chief economist Philip Lane reiterated on Thursday that the ECB will continue to follow a firmly data-dependent approach to determining the appropriate level and duration of restriction. "In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission," he specified.
Lane also expressed the view that monetary policy needs to carefully balance the risk of overtightening by keeping rates too high for too long against the risk of prematurely moving away from the hold-steady position.
The official also stressed that the ECB's policymakers need to be further along in the disinflation process before they can be sufficiently confident that inflation will hit the target in a timely manner and settle at the target sustainably.