Note: dashed lines denote an interval around zero of plus/minus two standard deviations of projection errors realized in 2003-2020; latest observation: 2022 Q4.
We should be guided by our reaction function, taking stock of inflation developments, underlying inflation dynamics and the strength of monetary policy transmission, also given the possible risks for the medium term outlook stemming from both the real economy and the financial sector. [1] This way we can ensure that we calibrate our measures in the light of the incoming information.