The good news is that we understand the challenges we face: to strengthen EMU; to ensure sustainable policies; to improve competitiveness. And to meet these challenges, we can look to several countries for examples. But the key is to persevere on the path of reform – and to take inspiration from others that are succeeding.
In particular, we judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our two per cent medium-term target.