If credit is tight and consumption is contracting, consumers who are reluctant or unable to increase their debt levels can use debit cards to pay for current expenses out of current, rather than future, income. In addition, for individuals with existing credit card balances, interest must be paid on new purchases as well as on previous balances.
This does not constitute a change of strategy; it is an attempt to explain our monetary policy stance even more simply and clearly – so that it is understood; if possible, by all market participants. It outlines our likely monetary policy response based on current data and the Eurosystem’s two-pillar approach to analysing risks to price stability.