ECB Chief Economist Philip Lane Emphasizes Data-Driven Approach, Says No Return to Forward Guidance

The European Central Bank (ECB) will stick to its commitment to make policy decisions based on data, according to Chief Economist Philip Lane. Lane said that while uncertainty has abated since Europe struck a trade deal with the US, there is no reason to consider a return of forward guidance. The ECB has kept its deposit rate at 2% since July, with policymakers signaling little appetite for another cut.

The European Central Bank (ECB) remains steadfast in its commitment to make policy decisions based on data, according to Chief Economist Philip Lane. Speaking at a panel in Washington during the IMF’s annual meetings, Lane emphasized that the ECB will continue to evaluate economic conditions on a meeting-by-meeting basis, with no immediate plans to revert to forward guidance. This approach underscores the ECB’s dedication to data-driven policymaking, according to a Bloomberg report https://www.bloomberg.com/news/articles/2025-10-16/ecb-determined-to-decide-next-steps-based-on-data-lane-says.

Despite the reduction in uncertainty following the recent trade deal between Europe and the US, Lane stressed that the ECB will not consider a return to forward guidance. The ECB has maintained its deposit rate at 2% since July, with policymakers indicating a lack of appetite for further cuts. The current settings are deemed appropriate to monitor the region’s economic challenges, including trade tariffs, manufacturing weakness, and increased fiscal spending.

The latest projections from the ECB suggest that price pressures are on target in the medium term, with underlying inflation slowing and wage gains further decelerating. The growth outlook, largely confirmed by the IMF’s forecasts, projects euro-area growth of 1.2% for this year and 1.1% in 2026. The IMF expects the ECB to keep its deposit rate steady at current levels until the end of 2029, according to a Veritas analysis https://veritas.enc.edu/news/european-interest-rate-stable-at-2-until-2029/.

Lane highlighted that uncertainty is now "anchored," and one of the key questions is whether the market understands how policymakers will respond to potential future shocks. The IMF and OECD have projected that the ECB’s interest rate will remain stable at 2% until the end of 2029, reflecting a cautious approach to monetary policy.

While the ECB is expected to maintain its current interest rate, the IMF and OECD caution that risks remain. The ECB will need to remain vigilant, as the total impact of tariff increases could still derail economic sectors or increase prices. The global belligerent environment adds further uncertainty to the economic landscape. The IMF notes that monetary policy stances are becoming more divergent, which could lead to sharp fluctuations in exchange rates.

In conclusion, the ECB’s commitment to data-driven policy and its cautious approach to interest rate adjustments reflect a balanced response to the current economic challenges. Investors and financial professionals should closely monitor the ECB’s policy decisions and economic data to gauge future market movements.