European Central Bank Chief Economist Philip Lane said that inflation rates in the Eurozone will remain higher than expected for longer than originally thought, according to Reuters citing Germany's Faz. As a result, the ECB is revising its assessment of the duration of inflation, Lane added, saying that inflation may be approaching its medium-term target. Lane reiterated that he expected inflation to ease in the course of the year, but that it is uncertain as to how fast and how far it will fall. Geopolitical tensions are currently a very significant risk factor, especially for Europe, Lane concluded. 

Market Reaction

Lane's recognition that ECB inflation forecasts will need to be lifted at the coming policy meeting, likely implying that the ECB will end its net bond-buying in Q3 and start lifting interest rates in Q4, has not surprised the market, though is an important moment for ECB policy. The euro has not reacted.