European Central Bank (ECB) Executive Board Member Philip Lane stated on Thursday that the normalization process that will lead to inflation at 2% should be gradual and warned that its timeline is "intrinsically uncertain." He pointed out that factors such as the conflict in Ukraine, the energy shock and the post-pandemic recovery, as well as the impact of shifts in financing conditions on inflation, add to the unpredictability of the process.
Lane reiterated that "there has been a substantial and widespread shift in longer-term inflation expectations since early 2021." He estimated the euro area is "unlikely to revert to the persistent below-target inflation trend that was so entrenched before the pandemic."