With the seemingly innocuous observation that the euro-dollar rate ‘does matter’ for monetary policy, European Central Bank Chief Economist Philip Lane unleashed a bout of foreign exchange market turmoil, perceived by some as talking down the euro. Whether that was the aim of Lane’s remarks is unknown. He was probably speaking as an economist, making the obvious point that currency movements are one channel for monetary policy transmission and a rising euro will add to the euro area’s strong deflationary pressures and squeeze growth. But as many senior financial authorities have learned the hard way, publicly ... (full story)