ECB/Lane: Inflation near peak

European Central Bank (ECB) Chief Economist Philip Lane said that inflation is near its peak and that interest rate hikes will continue. In an interview with the Milano Finanza newspaper, European Central Bank Chief Economist Lane said, “It’s too early to say that we’ve seen the peak. But I’m sure we’re close to the peak. Whether that peak will be seen now or at the beginning of 2023 is still unclear.” Noting that more interest rate hikes are necessary, Lane said, “We’ve increased interest rates by a total of 200 basis points so far. We should take that amount into account in subsequent hikes.” Noting that they did not rule out the possibility of inflation increasing early next year, Lane indicated that inflation would slow significantly in the summer or fall of 2023. Lane said, “The journey to reaching the 2 percent target will take time.” Lane said that annual inflation could decline to 6-7 percent next year. As the European Central Bank’s interest rate decision approaches, officials are giving signals that the pace of interest rate hikes may slow. Bank of Ireland Governor Gabriel Makhlouf said yesterday that after two consecutive months of 75 basis point hikes, there could be a 50 basis point increase at the December meeting.