Rising risk of undershooting would support slight cut in ECB rates, Lane says

FRANKFURT (Reuters) -Shifts in the risk profile of euro zone inflation will impact ECB policy decisions and a rise in the chance of undershooting the target would firm the case for a ‘slight’ reduction in borrowing costs, ECB chief economist Philip Lane said on Monday.

The ECB has cut interest rates by 2 full percentage points in the year to June but has been on hold ever since and policymakers are now debating whether to go even lower or level off at the current 2% rate since inflation is now at target.

“Shifts in the risk distribution will also matter for our rate decisions: an increase in the likelihood or intensity of downside risk factors would strengthen the case that a slightly-lower policy rate might better protect the medium-term inflation target,” Lane said in a speech in Frank