The European Central Bank is grappling with a significant macroeconomic risk. Inflation in the eurozone may remain above the 2% target for an extended period. This warning was officially issued by ECB Chief Economist Philip Lane, as reported by Bloomberg. According to the official, the European economy is unlikely to return to long-term price stability targets anytime soon. Nevertheless, the regulator does not plan to abandon its monetary goals and will continue to take measures to anchor inflation at 2% in the medium term.

Lane justified his concerning forecasts by highlighting persistent inflationary pressures that are expected to linger in the domestic market over the coming months. Key negative indicators for the regulator include recent purchasing managers' survey results and current expectations of European businesses regarding future selling prices for their goods and services. These factors clearly demonstrate that internal businesses in Europe are still embedding increased costs into the final prices of products, hindering normalization and sustaining high consumer price growth rates.

As Bloomberg points out, such statements from leading economists confirm the conservative viewpoint held by market participants: merely ending the armed conflict in the Middle East and unblocking trade routes may not be sufficient to fully rein in inflation in Europe. Notably, Philip Lane’s recent remarks somewhat contrast with the more optimistic stance of ECB President Christine Lagarde. Previously, she had expressed confidence in a stable return of inflation to the 2% target, stating that the regulator no longer needs to respond aggressively to the fallout from the Middle Eastern crisis.