FRANKFURT, May 13 (Reuters) - A global oil shock from the Iran war may well require the European Central Bank to raise interest rates to stop higher fuel costs from spreading to wages, expectations and broader prices, the ECB's chief economist Philip Lane said on Wednesday.
Lane laid out the case for a well-telegraphed ECB rate hike in June, which some policymakers see as the first of several, despite an unfolding hit to economic growth for the energy-importing euro zone.
"The optimal response might be smaller for an exogenous supply disruption than for a demand shock but there are several reasons why an active response may be required," he told an audience in London.
Among those reasons, he noted that the Iran conflict was coming hot on the heels of a bout of high inflation following the end of the COVID-19 pandemic and Russia's invasion of Ukraine, meaning firms and consumers were likely more attentive to prices.
Lane reaffirmed the ECB's line that "a mid-size but not-too-persistent overshoot could warrant some measured adjustment" while the response had to be "appropriately forceful or persistent" in the case of a more pronounced and lasting inflation surge.
Reporting by Francesco Canepa; Editing by Nia Williams
