European Central Bank chief economist Philip Lane says energy price surge and fiscal cuts may slow euro zone growth

Philip Lane, the European Central Bank's chief economist, said on Tuesday that rising energy prices, higher government bond yields, and reduced fiscal support could slow economic growth in the euro zone, potentially limiting the need for further interest rate hikes. The ECB has already raised rates twice this year, in June and September, to combat inflation that surged after the Middle East conflict and reached nearly double its two percent target. Lane noted that while energy costs pose an inflation risk, other factors like reduced fiscal support and higher financing costs may ease pressure, so a measured response remains appropriate. Financial markets expect two to three more rate increases in the next year.