ECB policymaker Lane says second-round effects would persist even after shock reversal
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ECB Chief Economist Philip Lane warned that inflationary pressures from the energy shock will persist even if we see a reversal. Lane highlighted that while the initial shock is fading, the resulting adjustments in wages and price-setting behavior continue to weigh on the economy
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Lead — The ECB's recent commentary underscores a cautious approach to monetary policy amid ongoing energy shocks, with decisions remaining data-dependent and made on a meeting-by-meeting basis. Per the full note [source], ECB's Lane highlighted that supply-driven energy shocks, particularly from geopolitical events, could lower euro area GDP growth by 0.2–0.3 percentage points. This dovish stance aligns with our view that the euro will remain under pressure, particularly as inflation expectations are closely monitored. The consensus target for EUR/USD remains at 1.075, with significant divergence among firms regarding future trajectories.