ECB policymaker Lane sees the current inflation shock as “mid-sized”, defends rate hike
- 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 Lane defended the latest 25 bps hike, arguing that policymakers had strong justification to tighten policy as inflation risks stemming from the US-Iran conflict and elevated energy prices continued to pressure the Eurozone economy.
Lane said inflation is expected to remain above 3% for the rest of the year, highlighting the ECB’s concern that the recent energy-driven price shock could become more entrenched.
The ECB delivered the rate increase at its last meeting in response to persistent upside inflation risks, particularly after the escalation of the US-Iran war triggered a sharp rise in oil and gas prices over recent months. Higher energy costs have fed into transportation, manufacturing, and consumer prices across the eurozone, raising fears of second-round inflation effects.
He also struck a constructive tone on economic activity, noting that the Eurozone continues to show resilience and maintaining steady momentum.
Lane characterized the current inflation episode as “a mid-sized inflation shock”, suggesting the ECB does not view the situation as comparable to the extreme energy crisis seen in 2022. However, the persistence of elevated price pressures remains sufficient to justify a cautious, restrictive policy stance.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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