The so-called doves on the European Central Bank council – those arguing for caution on interest rate rises – have lost the first round of the battle to the hawks, who have been pushing for action. An interest rate rise in July now looks on the cards, with ECB chief economist Philip Lane, one of the leading "doves", now arguing the timing of the first rate increase is not what is important, it is the pace of rises thereafter.

Lane had argued that the inflation rise was likely to be temporary and so the ECB should move cautiously. But as the monthly data has risen and other central banks have moved, the argument has moved against him. The ECB has had to revise its inflation forecast. And from a position early this year when she argued that no interest rate rise could be expected this year, ECB president Christine Lagarde has had to adjust her stance.

Ukraine war

Given the pace of rate rises elsewhere, particularly in the US, and the inflation figures, the pressure on the ECB to move is now intense. The evidence of inflation spreading more widely beyond volatile energy and food is a bit less in the EU than in the US, but it is happening nonetheless. However, the dilemma the ECB will face later this year is if developments associated with the Ukraine war, such as an interruption in gas supply, push the euro zone into recession, or a period of very slow growth. The risk is that inflation will still be high – but if demand is slowing what is the point in keeping on the road to rate rises?

Lane knows these battles lie ahead – and that the outlook is really uncertain. The doves will likely have to concede in July – and again in the autumn. But by then ECB deposit rates will only be back at, or slightly above, zero and there may be big arguments about where to go next.