By Marc Jones and Balazs Koranyi
LONDON, June 16 (Reuters) – The European Central Bank will continue to be “proactive” in its fight against high inflation even after a deal between the United States and Iran brought down energy prices, the ECB’s chief economist Philip Lane said on Tuesday.
The ECB raised interest rates for the first time in nearly three years last week and left the door open to more tightening to prevent a surge in fuel costs caused by the Iran war from spreading to other prices.
Lane said that oil prices remained above pre-war levels even after a fall this week and that the ECB would keep up its fight against inflation, which is now expected to be above its 2% target for a year.
“We will continue to be proactive in monetary policy in line with how the risks evolve,” he said in an interview at the Reuters NEXT Europe conference in London.
The interim agreement between the United States and Iran would extend a tenuous ceasefire and reopen the Strait of Hormuz, which Iran has effectively blocked since the U.S. and Israel attacked Iran in February.
OIL PRICES CLOSER TO BASELINE AFTER DEAL
Lane noted that financial investors were betting that Brent oil prices would remain above $70 a barrel for years to come, standing between the ECB’s baseline and its milder scenario but closer to the former.
“It’s hovering between our baseline and the modest scenario. But in the end, I think on a multi-year perspective, closer to baseline,” Lane said.
The ECB sees inflation at 3.0% this year, 2.3% next year and 2.0% in 2028 in its baseline, while the milder scenario has inflation falling below target next year.
EURO ZONE ECONOMY IS RESILIENT
In further comments that may be perceived as backing the case for more rate hikes, Lane listed a series of factors that would offset in part the energy shock on the euro zone economy.
These ranged from a recovery in construction to growing real earnings and more fiscal spending in Germany, Lane said.
“Lots of individual items are positive,” he said. “And so the clearly negative energy shock is in the context of this wider resilience.”
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(Additional Reporting by Yoruk Bahceli; Writing by Francesco Canepa in Frankfurt; Editing by Alison Williams)
By Marc Jones and Balazs Koranyi | Reuters | © Copyright Thomson Reuters 2026.
