ECB’s Lane flags stubborn inflation despite Iran deal, keeping euro bid and oil selloff in check.
The article quotes ECB chief economist Lane asserting inflation persists despite the Iran deal, implying the central bank will maintain tight policy. This supports the euro as rate-cut expectations are pared.
Lane’s warning that inflation remains stubborn reduces the chance of the ECB cutting rates soon. Higher-for-longer rates attract capital flows into the euro, lifting the pair.
A sudden drop in energy prices from the Iran deal or weak eurozone economic data could force the ECB to turn dovish, triggering euro selling.
ECB chief economist Philip Lane said inflation is still in the pipeline even as the Iran nuclear deal was expected to ease energy costs, signaling the central bank’s tight stance may extend. Brent crude slipped after the deal’s announcement but Lane’s comments cap oil’s downside. The euro held firm with markets repricing rate-cut expectations.
Lane acknowledged the Iran nuclear deal but stressed that inflation is still in the pipeline, meaning price pressures remain and may not subside quickly despite potential energy price relief.
It reinforces the ECB’s hawkish bias, reducing market odds of imminent rate cuts and keeping borrowing costs higher for longer, which supports the euro.