ECB to Raise Inflation Forecast in June, Lane Says
ECB Chief Economist Philip Lane said the central bank will likely raise its inflation projection in June due to elevated energy prices from the Iran war, signaling a potentially slower pace of rate cuts.
The European Central Bank will likely raise its quarterly inflation projection next month, as the Iran war keeps energy prices elevated, Chief Economist Philip Lane told Nikkei in remarks published Monday.
The ECB is set to update its staff macroeconomic projections at the June policy meeting. Lane indicated that the inflation outlook will be revised upward, reflecting persistent upward pressure from energy costs. The Iran conflict has disrupted crude oil supplies, keeping Brent crude above $90 per barrel and feeding through to broader energy prices. For fuel traders, this means that the ECB's revised forecasts could reinforce expectations for a slower pace of monetary easing, as the central bank prioritizes inflation control over growth support. NowPrice's real-time fuel quotes show diesel and gasoline prices remaining elevated across the euro zone, with the Brent-WTI spread widening on supply concerns.
Markets will watch the June ECB meeting closely for the magnitude of the inflation revision and any guidance on the rate path. Lane's comments suggest that the central bank sees the energy-driven inflation as persistent enough to delay rate cuts, potentially keeping the euro under pressure against the dollar. Traders should also monitor OPEC+ responses and any diplomatic developments in the Iran conflict, as these could alter the energy price trajectory.