European Central Bank (ECB) Chief Economist Philip Lane has warned that a prolonged war in the Middle East could cause a significant increase in euro zone inflation and reduce economic growth. Lane noted that a rise in energy prices could put upward pressure on inflation, particularly in the near-term, and the impact on medium-term inflation depends on the length and duration of the conflict. Previous sensitivity analyses by the ECB indicated that such a war would lead to a substantial increase in energy-driven inflation and a sharp drop in output if there was a persistent drop in energy supplies out of the region. Currently, Euro zone inflation stands at 1.7%, below the bank's 2% target, suggesting that a small increase in price growth is unlikely to trigger action.