European Central Bank (ECB) Chief Economist Philip Lane said on Thursday that policy actions are clearly tightening financial conditions, as reported by Reuters.
"Much of the ultimate inflation impact of our policy measures to date is still in the pipeline," Lane added. "Over time, our monetary policy will make sure that inflation returns to our target in a timely manner."
"Models signal for the most part point to a strong and orderly transmission of the ECB’s policy tightening to the relevant financial and real variables."
"Open minded about the precise scale of the monetary policy tightening that will be needed to achieve this outcome."
"Calibration of the monetary policy stance needs to be regularly reviewed in line with the incoming information about underlying inflation."
"Models suggest that reducing our asset portfolio by a normalised cumulative €500 billion reduction over 12 quarters contributes to lowering inflation by 0.15 percentage points and output by 0.2 percentage points."
"Tightening is estimated to have already lowered inflation by around 0.2 percentage points in 2022."
"Inflation is estimated to be around 1.2 percentage points lower in 2023 and 1.8 percentage points lower in 2024 as a result of the tightening."
"Significant amount of excess savings could dampen the transmission of higher policy rates to the economy and inflation."
EUR/USD stays on the back foot following these comments and the pair was last seen losing 0.2% on the day at 1.0670.
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