Yet, we see inflation easing back to within-target range at 3.9 percent in 2023. With strong economic growth numbers and fast normalizing labor market, we see the need for monetary action. As evidence of second-round effects manifest, we deemed it timely to increase our key policy rate by 25 basis points to 2.25 percent.
In Luxembourg, automatic stabilisers tend to exert a more stabilising impact than public investments, because investment programmes typically have to go through heavy legal procedures, which results in long and variable implementation lags. Of course, the free play of automatic stabilisers presupposes the attainment of a sound budgetary position, as will be demonstrated in my answer to the third question.