Recent supply shocks should lower inflation
Forwardlooking indicators point to disinflation
Rate hikes to end when clear inflation is heading to target
Rate plateau should be held for some time

FRANKFURT, Feb 28 Reuters Euro zone inflation pressures have begun to ease, including for allimportant core prices, but the European Central Bank will not end rate hikes until it is confident price growth is heading back towards 2, ECB Chief Economist Philip Lane said.

The ECB has raised rates by 3 percentage points since July and promised another half a percentage increase in March, in the hope that more expensive funding will curtail demand enough to get price growth down from levels still above 8.

Lane said higher interest rates are working their way through the economy, weighing on the price of services and other core goods, which exclude volatile fuel and food.

Theres significant evidence that monetary policy is kicking in, Lane told Reuters in an interview. For energy, food and goods, theres a lot of forwardlooking indicators saying that inflation pressures in all of those categories should come down quite a bit.

Other policymakers, including board member Isabel Schnabel and Dutch central bank chief Klaas Knot, have expressed concern core inflation could get stuck and perpetuate inflation.

For the ECB to end rate hikes, Lane outlined three criteria. The bank needs lower inflation projections through its threeyear forecasting horizon and to make progress in…