Lane takes ECB hot seat as market frets over depth of eurozone recovery
Philip Lane has begun his first week as European Central Bank (ECB) chief economist as confidence in the eurozone's recovery remains fragile and with many looking to Frankfurt to do more to foster growth.
The timing of his start means Prof Lane will immediately be met with a flurry of new data, updated forecasts and a policy meeting at which he'll present the executive board's proposals to the full ECB governing council including central bank governors from across the eurozone.
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Some officials are losing confidence in the recovery amid global trade tensions and investors clamouring for details on upcoming bank loans.
If he gets it right, the 49-year-old Harvard PhD will establish his credentials as the institution starts a transition that will see President Mario Draghi and markets chief Benôit Coeuré replaced this year.
"This is a difficult moment for the euro area - after a couple of years of strong growth, economic activity has disappointed and inflation continues to be stuck at a low level," said Gian Maria Milesi-Ferretti, deputy research head at the IMF, who has worked with Prof Lane for more than 20 years. "These are not easy waters to navigate, and require the ability to think outside the box. Having a person like Philip who remains open and willing to learn and experiment will be very important."
Prof Lane brings two decades of academic experience, most recently as a professor at Dublin's Trinity College from where he was picked in November 2015 to run the Irish Central Bank.
His public persona will likely stand in stark contrast to his garrulous Belgian predecessor Peter Praet, who provided the economic rationale for the ECB's negative interest rates and quantitative easing.
The two men have spent the past few weeks working closely together as Mr Praet prepared the updated economic projections for the June 6 Governing Council meeting in Vilnius.
Prof Lane's move to Frankfurt coincides with a renewed call for a so-called European safe asset that would help shield the region's financial markets from future crises.
He has long pushed the idea of pooling euro area government bonds and distributing in tranches of different risk, and his new role could give him more heft to put it back on the agenda.
"He'll always be open to new ideas and approaches and is definitely not ideologically hidebound," said Patrick Honohan, the former Central Bank governor in Dublin. "He'll be looking for proper solutions and you may have a difficult time labelling him. He's calm, he doesn't fluster easily, and this is a plus."
Prof Lane will get reports this week on economic growth and unemployment as well as a critical reading of inflation which will influence investor sentiment over whether the ECB will ever raise interest rates in this economic cycle. (© Bloomberg)