Economic developments are continuously influenced by a large variety of demand and supply shocks. Fiscal policies may turn out different than expected. Exchange rates may move by more than warranted by underlying fundamentals. Commodity prices not only depend on supply and demand but also on geopolitical tensions.
It is therefore a permanent challenge for the central bank to extract relevant information from diffuse data and events and to determine the appropriate path of monetary policy. Since the introduction of the euro, the Eurosystem systematically analysed and cross-checked economic and monetary information under its two-pillar strategy, in the context of its forward-looking, medium-term framework.