In that case, it’s just possible that the central banks in Britain and the 20-country eurozone will get there first. The top bet is that they’ll move with the Fed in June, but there’s a chance one or both could jump even earlier.
One reason for the uncertainty is that the prognostications of the various national central bankers on the ECB Governing Council are hard to average out. There are hardened hawks and determined doves, and the public commentary can ping from one to the next. In a speech on February 8, he said inflation had slowed more quickly than his team had expected, but he was still eyeing off wages growth, fiscal policy and firms’ input costs.
Inflation lingered at 4 per cent in January rather than a forecast pick-up. Declining energy prices and a straitened economy could get the rate back to the 2 per cent target as soon as April. “I think policy will need to remain restrictive for some time in order for inflation to sustainably return to target,” Greene said. She reckoned the policy was tight enough to achieve that, but “I would need to see further evidence that inflation persistence is less embedded than previously feared before I would consider voting to loosen policy”.
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