Dinner remarks by Philip R. Lane, Member of the Executive Board of the ECB, at the Centre for European Reform

London, 13 May 2026

My aim in this speech is to outline some of the analysis carried out by ECB economists in relation to energy supply shocks. I do not attempt to provide a comprehensive account; rather, I will focus on a selective set of issues.^[1][2] In the final part of the speech, I will discuss the implications for monetary policy.

The economic impact of supply-driven oil price increases

In order to quantify the impact of the current oil price shock on the euro area economy, ECB staff have estimated a Bayesian vector autoregressive (VAR) model. The model includes a series of identified geopolitical oil supply shocks along with the global real price of oil, a global economic activity indicator, euro area real GDP, private consumption, investment, consumer prices, and short and long-term interest rates.^[3] The source of an oil price movement is crucial in assessing its…