The European Central Bank should avoid excessive caution in lowering its key interest rate, but must also be alert to signs that inflation is taking longer than expected to fall to its target, Chief Economist Philip Lane said Wednesday.

The European Central Bank should ease policy at a measured pace to balance the risk of needlessly depressing growth and fuelling excessive inflation, ECB chief economist Philip Lane argued on Wednesday.

Chief Economist, Philip Lane, has suggested that the bank needs to maintain flexibility in its monetary policy due to the continued risk of inflation in both directions.

For those hoping for real clarity about what’s next for the ECB, the long-awaited working paper will have been a disappointment. In short, the paper concludes that the neutral interest rate ranges between 1.75% and 3% when using the most recent data between 1.75% and 2.25%.

The European Central Bank may still be several interest rate cuts away from the level where it stops holding back economic growth, it said in a paper on Friday, though it downplayed the significance of the latest estimate.