Low inflation may become more persistent: ECB's Lane

FILE PHOTO: Philip Lane, chief economist and executive board member at the European Central Bank, attends a meeting in Paris, France, November 18, 2019. REUTERS/Gonzalo Fuentes/File Photo

FRANKFURT (Reuters) - Low inflation could become more persistent in the current global environment and price growth may deviate from central bank targets for longer periods, European Central Bank chief economist Philip Lane said on Friday.

“In a world of low inflation and low interest rates it is plausible that the impact of negative shocks on observed inflation is likely to be more persistent, since the available policy space to quickly offset negative inflation shocks is more constrained,” Lane said in a largely academic speech.”Under these conditions, there may be prolonged deviations of inflation outcomes away from the inflation aim, with central banks closing inflation gaps over a longer time horizon.”

Reporting by Balazs Koranyi; Editing by Catherine Evans