These critics claim that European monetary policy is not sufficiently transparent, and therefore sends out misleading signals, especially regarding the future course of key interest rates. This assertion is particularly surprising given that many studies have shown time and again that the predictability of the single European monetary policy is, in fact, very high – not low, as some critics claim.
This is one reason why we are seeing a pronounced divergence between weakening manufacturing and resilient services. The strengthening transmission of policy tightening to the economy helps explain why inflation is projected to decline further towards our target, since it will increasingly dampen demand.