The bottom line is that we need to approach the normalisation of our monetary policy carefully and gradually. But we also need to be very careful that we do not act too tentatively and too late and end up falling “behind the curve”. How much do you worry that the ECB would have hardly any ammunition left with which to counter a future downturn?
We are always saying that fiscal policy should build up buffers in good times. But that is also true for monetary policy. If a central bank were to run out of ways to react to a recession, that would be worrying. This too demonstrates that the current level of interest rates is certainly not the normal state of affairs.