ECB’s Lane Signals Prolonged Inflation Due to Second Energy Shock, Markets Price December Hike

• ECB’s Philip Lane projects Eurozone inflation to return to 2% target from mid-2027.
• A second wave of energy price increases is cited as the reason for prolonged inflation.
• Money markets fully price in an ECB rate hike by December 17 meeting.

European Central Bank (ECB) Chief Economist Philip Lane indicated that a second wave of energy price increases, affecting both oil and gas, is set to keep Eurozone inflation elevated for a longer duration than previously anticipated. In an interview conducted on September 15, 2026, and published on September 22, 2026, Lane stated that inflation is now projected to ease towards the ECB’s 2% target only from mid-2027 onwards. He added that the euro area economy is expected to expand steadily, provided the energy shock does not intensify further. Following these remarks, money markets have priced in nearly 35 basis points of tightening by year-end, fully anticipating a rate hike by the December 17 meeting.