ECB Shouldnt Overreact to Every Little Data Point, New Board Member Says

European Central Bank officials shouldnt overreact to individual points of incoming data when setting monetary policy as the current environment is highly uncertain, incoming Executive Board member Philip Lane said.

While the ECB has acknowledged a shift to the downside in recent weeks, the domestic euro-area economy remains “pretty strong,” Lane, who currently leads the Irish central bank, said at an event in Hong Kong on Tuesday.

“So we will have new comprehensive forecasts in March and at that point I think the ECB can decide where next,” he said. He later added that remark was “no signal whatsoever about decision making.”

Lanes view on incoming data echoes that of ECB Vice President Luis de Guindos, who said on Monday that many of the factors signaling a slowdown in the 19-nation currency bloc were temporary in nature. Manufacturing across the region has slumped and business sentiment is subdued, adding to fears that the global economy is slowing sharply in the first few months of 2019.

Guindos Says ECB Is Reviewing Incoming Economic Data ‘Carefully’

“It is even more important during these periods to make a close study of the data because what we have is I think different signals,” Lane said. It is early days in 2019, we have to not over react to any particular announcement or new data release and really take a measured approach to all of the data."

The 49-year-old Harvard-trained economist is the only candidate to replace current ECB chief economist Peter Praet. Euro-area finance ministers gave their support on Monday for Lane‘s candidacy to become a member of the central bank’s executive board, the formal role that would underpin his position leading the ECBs economics staff.

Governments will then make the final appointment when EU leaders gather in Brussels for a summit in March, after consultations with the European Parliament and the Governing Council of the ECB.

Lane commented on Brexit, saying he thinks it is likely that the U.K. and the European Union will eventually agree on a deal, with a long transition period, avoiding a chaotic crash out of the bloc.

“The incentive for the U.K. to accept a version of the current deal is very strong.”