Lane Warns of Higher, Stickier Inflation Amid Second Energy Price Surge

European Central Bank Chief Economist Philip Lane has warned that euro zone inflation is likely to remain elevated for longer due to a second wave of energy price rises. The increase in oil and gas prices will put upward pressure on food, energy, and goods prices, he said.

In an interview with Le Temps newspaper, Lane noted that the ECB has raised rates twice since the Iran war drove energy costs sharply higher, and policymakers have been signaling further tightening ahead. Eurozone inflation is projected to reach around 4% in the near term, well above the bank's 2% target.

Lane also cautioned that a shock of any intensity this autumn would weigh on the economy, but he expressed optimism about several positive factors supporting growth, including substantial public spending and infrastructure investments. The European Union's NextGenerationEU plan is one such example, as is Germany's infrastructure and defense investment programme.