In this engaging discussion, Philip R. Lane, the Chief Economist and Executive Board member at the ECB, explores the intricate relationship between geopolitical uncertainty and inflation. He delves into the ECB's recent interest rate adjustments and the need for a flexible, data-driven monetary policy. Lane emphasizes the importance of integrating risks into decision-making and discusses upcoming topics at the ECB Forum in Sintra. He also shares a valuable hot tip for navigating these challenging economic landscapes.
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insights INSIGHT
Dual Purpose Interest Rate Cut
ECB lowered key interest rates to 2% reflecting progress in squeezing out high inflation.
The cut has a double purpose: addressing past inflation and ensuring future stability.
insights INSIGHT
Robust Policy Under Uncertainty
Monetary policy decisions are based on a robust baseline considering risks and uncertainties.
They check policy effectiveness against alternative scenarios to ensure robustness under uncertainty.
volunteer_activism ADVICE
Communicate Alternative Scenarios
ECB communicates alternative inflation scenarios openly for transparency.
This allows the public to assess risks based on their own concerns and perspectives.
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How does geopolitical uncertainty affect inflation? How do we keep monetary policy fit for purpose in a rapidly changing world? And what are the main topics at this year’s ECB Forum in Sintra, Portugal?
In the first episode of our special Sintra series for The ECB Podcast, our host Paul Gordon discusses all these questions and more with Chief Economist and Executive Board member, Philip R. Lane.
The views expressed are those of the speakers and not necessarily those of the European Central Bank.
Published on 25 June 2025 and recorded on 16 June 2025.
In this episode:
01:28 The ECB Governing Council lowered key interest rates to 2%.
What was the motivation behind the decision?
04:30 How do we ensure that risks and uncertainties are integrated into the monetary policy decision-making process?
What is our baseline? What factors need to be taken into account?
06:44 Alternative scenarios in the latest projections
Why do we communicate our “what if” scenarios?
08:11 Meeting-by-meeting, data-dependent approach
Why do we follow this approach?
09:50 Strategy review
How can we make sure our strategy is up to date?
12:02 High-level uncertainty
How do we factor heightened uncertainty in our strategy?
13:50 ECB Forum on Central Banking in Sintra, Portugal
What is the ECB Forum and what’s behind it? What’s the goal of the Forum? What’s Philip R. Lane looking forward to?
16:53 Our guest’s hot tip
Philip R. Lane shares his hot tip.
Programme of ECB Forum on Central Banking in Sintra, Portugal
https://www.ecb.europa.eu/press/conferences/html/20250630_ecb_forum_on_central_banking.en.html
Ken Rogoff "Our dollar, your problem"
https://yalebooks.yale.edu/book/9780300275315/our-dollar-your-problem/
ECB Instagram
https://www.instagram.com/europeancentralbank/
European Central Bank
www.ecb.europa.eu
ECB Banking Supervision
https://www.bankingsupervision.europa.eu/home/html/index.en.html
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