ECB chief economist LANE said on Thursday that even if the Middle East conflict is resolved quickly, the resulting energy shock could have a lasting impact on inf. While oil prices have historically fallen back to prior levels after a sharp spike, the current episode may differ because countries are rebuilding inventories or adjusting energy mixes, leaving energy costs elevated. LANE said: "Global oil supply fell quite rapidly and sharply overnight, a gap that had previously been masked by inven

ECB chief economist LANE said on Thursday that even if the Middle East conflict is resolved quickly, the resulting energy shock could have a lasting impact on inf. While oil prices have historically fallen back to prior levels after a sharp spike, the current episode may differ because countries are rebuilding inventories or adjusting energy mixes, leaving energy costs elevated. LANE said: "Global oil supply fell quite rapidly and sharply overnight, a gap that had previously been masked by inventories. Even if the initial energy shock begins to fade, second‑round effects will persist for some time." He added that policy lessons from past energy shocks include that rising energy costs can abruptly push up inf and trigger "various non‑linear" mechanisms that broaden price increases. "But this is different from the non‑linear case four years ago," he said, referring to the Ukraine war, when supply disruptions combined with strong demand from the post‑COVID restart to lift inf. LANE said central banks must acknowledge any major shock and its potential impact on inf, but should avoid overreacting when setting monetary policy.