Wages may increase even more strongly than assumed in the projections. 3. Current monetary policy issues Given this outlook, the Governing Council of the ECB could not simply assume that high inflation will return to the target level of 2% on its own. On the contrary, monetary policy has to act decisively.
That's why the Governing Council of the ECB delivered six interest rate increases over the last eight months. Monetary policy rates increased by 350 basis points – the largest hike sequence ever in the euro area. However, increasing the policy rates is not the only instrument we have at our disposal.