ECB chief economist Lane warns inflation shock will delay return to 2% target

Philip Lane signals a prolonged period above target, complicating the central bank's policy pivot and keeping rate-cut expectations in check.

By Handelsavisen Newsroom · Automated 2026-07-26 10:08 UTC · 1 min read

European Central Bank chief economist Philip Lane has warned that the euro zone is facing a medium-sized inflationary shock that will keep price pressures above the 2% target for the foreseeable future.

Speaking on Monday, Lane indicated that inflation is likely to normalize to the target only within roughly a year, pushing back against market hopes for a rapid return to price stability.

The comments come shortly after the ECB held its key interest rates steady on Thursday, July 23.

Lane’s assessment underscores the central bank’s cautious stance, suggesting that while the current inflationary pressure requires policy attention, it does not warrant aggressive tightening.

Instead, the ECB appears prepared to maintain its current course as it navigates the renewed price pressures.

This second wave of inflation complicates the ECB’s planned policy pivot, which had been anticipated by markets following earlier signs of cooling price growth.