ECB's chief economist calls for urgent interest rate cuts to revive economy

In a recent interview published on November 25, 2024, the chief economist of the European Central Bank, Philip Lane, expressed his support for further interest rate cuts to help stimulate economic growth in the eurozone. Lane highlighted that recent economic data has shown surprising weakness, prompting discussions on easing monetary policy. He emphasized the need for gradual cuts in interest rates, reflecting a responsive approach to current economic challenges. Lane pointed out that inflation in the eurozone is expected to move closer to the ECB's target of under 2% in the coming year, but cautioned against allowing monetary policy to remain overly restrictive. He warned that a prolonged restrictive stance could hinder economic growth. Moreover, the potential for trade protectionist measures under the incoming US administration raises concerns about their impact on European economies, particularly if implemented swiftly. Lane suggested that a wide range of outcomes could result from such policies, emphasizing the necessity of preparing for economic disruptions. The ECB’s next interest rate meeting is anticipated to further address these issues, with a possibility of easing monetary policy in light of recent economic indicators.