Lane says ECB can cut interest rates and further boost stimulus
The European Central Bank (ECB) has room to ease policy further if needed and should let there be no doubt about its "absolute commitment" to meeting its inflation mandate, new ECB chief economist Philip Lane said on Monday.
With growth and inflation slowing for much of this year, the ECB has already said that it may need to provide more stimulus, possibly through interest rate cuts and more asset purchases.
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But with interest rates already down to a record low and the ECB's balance sheet at €4.7trillion, critics say that the potency of its remaining tools is limited.
"Our assessment is that [our] policy package has been effective and further easing can be provided if required to deliver our mandate," Mr Lane told a conference in Helsinki.
"The effectiveness of the policy toolkit means that we can add further monetary accommodation."
The former Irish Central Bank Governor is the newest ECB board member. He said that if Frankfurt does opt for a rate cut, it will also assess whether "mitigating measures" are needed to offset the side effects of negative interest rates on banks.
Mr Lane also said that it was essential for the ECB to demonstrate its commitment to its mandate, which is to keep inflation at close to but below 2pc, a mark it has undershot since 2013.
But the ECB should also be open-minded to how it conducts policy, he said.