20:30 - 18.06.2026
June 18, Fineko/abc.az. European Central Bank (ECB) Chief Economist Philip Lane stated that the neutral rate of interest is likely as high as 2.50%, arguing that an additional interest rate hike would not trigger a severe economic contraction across the Eurozone.
According to ABC.AZ, speaking at an industry event hosted by Deutsche Bank, Lane pointed out that the central bank's decision a week ago to raise borrowing costs has not yet exerted a genuinely restrictive drag on regional macroeconomic growth.
Core Monetary and Policy Takeaways:
Neutral Rate Model Adjustments: Lane confirmed that according to the latest central bank metrics, the upper bound of the estimated neutral rate corridor has been upgraded to 2.50% from the prior 2.25%. For context, ECB staff models in early 2025 had pinned the baseline neutral equilibrium zone between 1.75% and 2.25%.
Market Outlook and Dissent: Last week’s tightening marked the ECB’s first interest rate hike since 2023, with global trading desks pricing in one more increase before the year ends. Concurrently, opposition voices warn that driving borrowing costs higher while growth across the 21-nation Eurozone begins to decelerate could induce unnecessary economic friction.
