European Central Bank Chief Economist Philip Lane said on Monday that while Euro zone inflation is expected to slow sharply this year, the momentum for

price growth remains high for now, including for underlying goods and services.

The ECB has already lifted rates at its past seven meetings but slowed the pace of hikes last week, stating that there is already plenty of policy tightening in the pipeline and overall inflation has already turned around after double-digit readings last autumn.

Lane believes that there is still momentum in food and core inflation and that sharply lower energy prices and easing bottlenecks should speed disinflation, while corporate profit margins, which were a key driver of prices last year, should also come down.

The ECB projects inflation falling below 3% by the fourth quarter, but it could then take almost two more years before it falls to the bank's 2% target.

Some policymakers question this projection and argue that there's a risk that price growth could get stuck above the ECB's target, and Lane noted that a key reason for such a protracted process is that nominal wage growth could stay relatively strong for years as workers recover incomes lost to inflation. Photo by Eric Chan, Wikimedia commons.