Lane: a second energy wave keeps euro area inflation higher for longer
Serguey Asael Shinder2 min readPhilip R. Lane, member of the ECB's Executive Board, gave an interview to Le Temps conducted by Sébastien Ruche on 15 September 2026 and published by the ECB on 22 September 2026.
His account of the year runs in two waves. An initial round of energy price increases came in March and April, followed by optimism after the United States and Iran signed a Memorandum of Understanding on 17 June intended to end the conflict. The war continued, and a second wave of increases is now under way — not only oil but gas. That is why, Lane says, the ECB indicated on 10 September that it expects the energy shock to last longer than it had anticipated in March. Markets had expected the peak around June and a recovery in the second half.
The consequence he draws is explicit: inflation is likely to be higher for longer, before falling back towards target from mid-2027 onwards. On pass-through, between February and the interview he reports none into other goods or services — "that's the good news" — but expects upward pressure ahead on food, on energy more broadly including electricity, and on goods generally, with pressure on services remaining contained.
On activity, the baseline is steady but modest growth provided the energy shock does not worsen, supported by government spending — he names the German infrastructure and defence package and Next Generation EU — and by European firms' participation in AI even though Europe is not at the centre of it. On fiscal risk he says Germany has the fiscal space, that NGEU is specific European funding and does not raise the same debt-sustainability concern, and that the boost from spending fades over time.
What it means
The forecast horizon is the number to hold onto. Saying inflation returns towards target from mid-2027 places the convergence roughly a year and a half out and makes the projection conditional on an oil and gas futures curve that Lane says points to some resolution later this year — a baseline he explicitly surrounds with uncertainty, noting the ECB are not political science experts.
The pass-through comment is the operationally useful one. No second-round effects so far, but expected upward pressure on goods with services contained, describes a shock the central bank is treating as still relative-price rather than generalised. That distinction, not the headline rate, is what determines whether a second wave calls for a policy response or for looking through it.