European Central bankThe institution that sets monetary policy for a country or currency area, including interest-rate decisions that can move currencies.Read More Chief Economist Philip Lane said the latest energy-PriceThe most recent agreement between a buyer and a seller. It is not a prediction; it is the market’s latest handshake.Read More surge creates both upside InflationA broad rise in prices that reduces money’s purchasing power. Central banks watch inflation because it affects interest-rate decisions.Read More risks and downside growth risks, with weaker DemandHow much buyers want at a given price. Stronger demand can make buyers compete with higher offers.Read More potentially limiting how much Monetary PolicyMonetary Policy refers to the set of central-bank actions used to influence money, credit, interest rates, and financial conditions. The term belongs in Level 7 because it helps...Read More needs to tighten. Lane said underlying inflation indicators do not yet show a persistent upward shift in medium-term inflation and described the appropriate policy approach as a measured 'middle path'. Higher energy costs can suppress household and business demand even as they lift headline prices, complicating the ECB's response after two rate increases during the summer.
ECB Chief Economist Philip Lane said weaker demand caused by an energy shock could reduce the amount of interest-rate tightening needed. His comments suggest that the economic slowdown from higher energy costs may partly offset inflationary pressures.
