ECB’s Lane sees inflation returning to target from mid-2027-paper

ECB Chief Economist Philip Lane warned on Tuesday that the European Central Bank had underestimated the duration of the energy shock, which is expected to push up oil and gas prices beyond March. Lane told Swiss newspaper Le Temps that the second wave of energy price increases will likely lead to higher and more persistent inflation, before eventually receding towards the ECB's target starting mid-2027.

When asked about potential spillover effects on other prices, such as electricity or services, Lane noted that so far, no such effects have been observed since February. However, he expects the second wave of energy price increases to put upward pressure on food prices, energy prices, including electricity, and goods prices in general. Meanwhile, pressures on services should remain relatively contained.