In particular, the PEPP has been a proportionate, well-designed and necessary asset purchase programme that fulfilled its dual role of stabilising financial markets and reversing the initial adverse impact of the pandemic on the projected inflation path.
As recently emphasised by President Lagarde, flexibility is a special principle for conducting monetary policy in a monetary union, as we must continually focus on ensuring that policy is transmitted evenly to all parts of the euro area. [13] With diverging initial conditions, exogenous shocks can affect economies asymmetrically. If this leads to financial fragmentation, the transmission of monetary policy can be disrupted.