Lane details economic outlook informing February ECB policy decision
Philip R. Lane, Member of the ECB Executive Board, presented a comprehensive overview of economic data and projections informing the European Central Bank's February 2026 monetary policy decision. His lecture at Maynooth University highlighted recent inflation trends, growth dynamics, and financial market developments in the euro area.
Inflation's path to target
Philip R. Lane's lecture detailed the euro area's inflation trajectory, a core element for the ECB's February 2026 monetary policy assessment.
The latest January 2026 flash estimate for HICP inflation, combined with December 2025 Eurosystem staff projections, outlines a clear path towards the 2.0 percent target.
HICP inflation is forecast to average 2.1 percent in 2025, then 1.9 percent in 2026, 1.8 percent in 2027, and 2.0 percent in 2028. This disinflationary trend is mirrored in non-energy inflation, also projected to converge to 2.0 percent by 2027-2028, despite an anticipated positive turn in energy inflation.
The Eurosystem balance sheet shows the deposit facility rate holding at 3.0 percent as of early February 2026. The continued unwinding of asset purchase programmes (APP & PEPP) and stable credit operations underscore the ECB's current policy stance, reflecting confidence in the disinflation process while monitoring underlying price dynamics closely.
Growth momentum and global trade shifts
The lecture further explored the euro area's economic growth and its global trade integration.
December 2025 Real GDP projections signal moderate expansion, underpinned by private consumption, investment, and exports.
Lane's presentation highlighted evolving global trade dynamics, including the euro area's export similarity with China and the performance of high-technology goods and semiconductors.
Euro area goods export volumes demonstrate resilience, shaped by various market share drivers.
Additionally, data on exchange rates, including USD/EUR and the nominal effective exchange rate, alongside commodity prices for Brent crude oil and natural gas, were reviewed.
January 2026 Purchasing Managers' Index (PMI) data for manufacturing and services provided current insights into economic activity, complementing consumer confidence and housing investment trends.
Steady course, subtle shifts
Philip R. Lane's data presentation reinforces the euro area's clear disinflationary path, with inflation projections firmly converging to the 2.0 percent target.
This provides a stable backdrop for monetary policy, though detailed insights into global trade and sectoral shifts reveal ongoing structural challenges.
The ECB must therefore maintain a vigilant, data-dependent stance, balancing confidence in disinflation with careful monitoring of external vulnerabilities and evolving growth drivers.