At our last monetary policy meeting on 7 November we discussed extensively whether or not to reduce the key ECB interest rates, in view of the high uncertainty surrounding future economic growth and its implications for medium-term inflationary pressures. Summing up, there were elements in favour and against both alternatives.
On the one hand, the subdued trends in economic activity and the stronger exchange rate of the euro supported the view that inflationary pressures should decline. On the other hand, the stubbornly persistent rate of inflation excluding the volatile components of energy and food prices as well as monetary and wage trends, argued for caution.