ECB policymaker Lane sees the current inflation shock as "mid-sized", defends rate hike
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Inflation will be above 3% for the rest of this year It's hard to make a case that we shouldn't have hiked There is a fair amount of resilience in the Eurozone economy Eurozone economy has steady momentum So far this is a mid-sized inflation shock ECB's Chief Economist Philip Lan
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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.