Swift enough to affect the price path and to prevent second-round effects and a de-anchoring of inflation expectations. Yet at the same time smooth enough so that households, corporates and financial markets can cope with it. For central banks, the challenge will be to sustain the recovery while containing the upward pressure on inflation in the medium term.
In my view, negative interest rates will relatively soon be history in the euro area. They no longer fit the changed environment. Fiscal policy, too, faces challenges in terms of mitigating the distributional implications of rising energy and commodity prices.