In a private meeting, European Central Bank (ECB) chief economist Philip Lane revealed that with German economists, the ECB expects to hit its 2% inflation goal by 2025. The ECB had not made this long-term forecast public. Because Lane could face questions about the reports. Lane told the German economists that, the ECB’s medium-term reference showed inflation. The ECB spokesman gave a written statement that Mr. Lane didn’t say in any conversation with analysts that the euro area will reach 2% inflation.
Lane was forced to suspend one-on-one meetings with investors, earlier this year. But still, he is meeting with groups of economists. The ECB reduced the pace of its emergency bond purchases. Last week they updated too. It now sees inflation at 2.2% this year. The central bank has pledged not to raise rates until it sees inflation hitting 2%. This could well be before the end of its forecast horizon, which is between two and three years. Two years from now, money markets have priced in a rate hike.