ECB Sets Sights on 2.0% Inflation Target by 2028 Amid Energy Shocks

European Central Bank (ECB) Chief Economist Philip R. Lane outlined the bank's inflation projections at the Reuters NEXT Europe conference in London on June 16, expecting a steady decline in euro area inflation from 3.0% this year to 2.0% by 2028.

The ECB's staff projections indicate that headline HICP inflation will clock in at 3.0% for 2026 before easing to 2.3% in 2027 and hitting the magic 2.0% target in 2028.

Lane acknowledged that energy shocks remain a stubborn source of inflationary pressure, with oil prices currently running above pre-shock levels but closely tracking baseline assumptions.

The ECB's deposit facility rate sits at 2.25%, and Lane emphasized the need to thread a needle between taming persistent price pressures and avoiding an economic stall.