DUBLIN (Reuters) – It is important not to be overly dramatic about a loss of some momentum in the eurozone economy, which to a large extent is a reversal of a better-than-expected 2017, European Central Bank governing council member Philip Lane said on Wednesday.
The ECB plans to end its 2.6 trillion-euro bond purchase scheme this year and raise interest rates next autumn for the first time in years, but growth has been disappointing since the summer.
Lane’s comments were in line with those of his boss, ECB President Mario Draghi, who said this week that the slowdown was mostly normal and not enough to derail plans to dial back stimulus.
“2017 was surprisingly good and so some of what happened in 2018 is a reversal of some of the upside in 2017. So there is this view that what we’re seeing to a large extent is just settling down at a more normal pace of expansion,” Lane, the head of Ireland’s central bank, told a news conference.
“All the data clearly show that the European economy continues to grow, that many of the key mechanisms are still quite positive. So I would say it’s important not to be overly dramatic about this.”
Employment, consumption and incomes continue to grow across the region, as does investment, although there was “less from the rest of the world,” he said, in reference to a slowdown in European exports.
Lane also said wage data remained in line with expectations and that employment was falling to “that zone” where there is more pressure on wages. However, it remained too early to discuss the timing of any interest rate increase, he said.
“The guidance was that rates would remain where they are through the summer of 2019, so I’m going to be silent on what month that means. It’s so far away in terms of the flow of data,” he said.
“We’re going to go through several forecast cycles before we get there, so you can’t answer this with any great certainty until much closer to the time.”
Editing by Larry King