The Chief Economist of the European Central Bank: Even if the US Iran situation rapidly cools down, the impact of inflation still exists On May 28th, Philip R. Lane, Chief Economist of the European Central Bank, pointed out at a conference jointly hosted by the Bank of Japan and its think tanks in Tokyo that even if the war rapidly eases, the impact of energy supply shocks caused by the Middle East conflict on inflation may still persist. The global oil supply has experienced a fairly rapid and significant decline overnight, but so far it has been overshadowed by inventory, "Ryan said. Ryan further emphasized, "Even if the initial shock begins to reverse, the second round of impact will continue for a period of time Compared to historical situations, he believes that this round of energy shocks has different characteristics. Although oil prices have often returned to their original levels after rapid increases in the past, countries are currently replenishing inventories and promoting energy structure diversification, which may keep energy costs high for a longer period of time. Against the backdrop of rising energy prices, the market has clearly strengthened its expectations for the European Central Bank to tighten its policies. The current financial market basically takes into account that the European Central Bank will raise interest rates twice on top of the 2% deposit rate, and believes that the probability of a third interest rate hike within the next year is about 50%. However, according to a Reuters survey, economists' judgments are relatively cautious, with most expecting the European Central Bank to only implement two interest rate hikes, followed by a rate cut in mid-2027. Ryan stated that the upward trend in energy prices may rapidly push up inflation through "various non-linear mechanisms" and spread to a wider price system. However, he also pointed out that this transmission mechanism was different from the situation four years ago, when the Russia-Ukraine conflict led to supply interruption, and demand rebounded after the epidemic, jointly driving up inflation.