Under the present arrangement, the country cannot use the exchange rate as a policy tool to control the increase or decrease in the supply of money. This has often been a source of resentment against this exchange rate arrangement as economic management is taken out of the hands of the domestic monetary authorities.
After the announcement of our new strategy and forward guidance, the risk distribution around the future evolution of the 3-month Euribor has been truncated from the top, meaning that investors have effectively priced out contingencies that foreshadow a very steep increase in policy rates (Slide 10).