European Central Bank (ECB) Chief Economist Philip R. Lane warned that energy costs could surface in pay agreements and businesses’ price revisions, carrying the shock beyond energy bills. Econostream Media and Yonhap Infomax reported his remarks.
Lane spoke during a Nov. 6 fireside chat in Frankfurt with New York Fed President John Williams, listed on the ECB conference program. The ECB’s weekly schedule said no text would be made available for the chat.
Eurostat’s flash estimate put annual energy inflation at an estimated 20.8% in October. Overall inflation was 4.0%, up from 3.8% in September, while inflation excluding energy was 2.3%. The energy inflation estimate had been 18.9% in September.
Eurostat assigned energy a weight of 90.3 per mille, or 9.03%, in its 2026 harmonized inflation basket. Econostream Media also reported that Lane described energy as roughly 10% of the index. The energy inflation figure covers that component, while the headline rate measures price changes across the full basket.
On Oct. 29, the ECB kept its deposit facility rate at 2.50%, its main refinancing rate at 2.65% and its marginal lending rate at 2.90%. The central bank said wages had not yet shown a material response to the energy shock. It said decisions would depend on incoming data and be made meeting by meeting, without committing to a rate path.
The ECB said the energy shock could lift inflation through indirect and second-round effects while weighing on growth. Its medium-term inflation target is 2%.
The Oct. 29 wage assessment described conditions at that time, while Lane’s later warning concerned a possible pass-through into future negotiations and pricing. The difference is between the wage response observed then and a risk that may emerge later.
The ECB Governing Council’s next policy decision is scheduled for Dec. 17.
