(Bloomberg) -- The full impact of the European Central Bank’s unprecedented monetary-tightening campaign is yet to be felt — even as officials gear up to lower borrowing costs in June, Chief Economist Philip Lane said.

“While the impact of the tightening cycle on economic activity might have reached its maximum level at the turn of this year, model-based analysis suggests that the bulk of the impact on inflation is comparatively backloaded, with substantial pass-through still expected to transpire in the period ahead,” Lane said.

The Irish policymaker said the current disinflation process that’s brought consumer-price gains to within sight of the 2% goal will continue into next year. This dynamic “is consistent with both inflation stabilizing at our target later in 2025 and a substantial economic recovery,” he said Monday in a speech in Dublin.

Officials are increasingly being asked what will happen after their planned quarter-point cut in the deposit rate on June 6. Most are unwilling to even comment on the subsequent path given uncertainty over wage growth and factors like the fighting in the Middle East. Markets have rethought the three reductions they’d been betting on in 2024 as recently as last week. They now fully price just two.

With strong pay gains for workers persisting and services inflation proving sticky, Lane told the Financial Times in an interview published earlier Monday that the ECB must keep policy restrictive throughout 2024.

Price growth in the 20 nation-bloc held steady at 2.4% from a year ago in April, with analysts polled by Bloomberg estimating an uptick in May to 2.5%. Policymakers have stressed the path toward the 2% goal will be bumpy.

“In deciding on the appropriate policy rate path, we will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction, and we are not pre-committing to a particular rate path,” Lane said. 

--With assistance from Jennifer Duggan.

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