ECB's Lane says the central bank will at every meeting consider what the scenario is before setting policy

COMMENTARY:

• Says consumer confidence fall was large, can be seen in the downturn within PMI data
• Inflation expectations show a significant effect for the first year of forecasts, then declines
• Notes market expects sizable inflation readings in March and April, before reverting to normal levels
• Market dynamics suggest a price-level jump
• Wage tracker is a good leading indicator for negotiated wages

SLIDES - FORECASTS:

• ECB's Lane says baseline assumes no explicit duration for conflict or energy infrastructure damage
• Adverse and severe scenarios see acute energy supply disruptions lifting inflation and weighing on growth
• Severe scenario assumes further destruction of energy infrastructure and more persistent market volatility
• Adverse and severe scenarios would lower Euro area real GDP growth from 2026-2028 vs baseline, would push up headline and core inflation

SLIDES - CONSUMERS:

• Says March 2026 consumer confidence shock tied to Middle East conflict is milder than after Russia's 2022 invasion

SLIDES - INFLATION EXPECTATIONS:

• Says market-based inflation expectations have risen since the start of the Iran conflict
• Says March 2026 energy price projections are nearing the threshold for medium-sized non-linear energy shock effects
• Survey evidence points to rising input costs and selling prices in early 2026, below 2022 peaks
• Wage indicators show pay pressures remained elevated into early 2026