Our “baby step” approach during 2010 was accordingly a delicate balancing act between supporting recovery at home amidst growing global uncertainty and containing inflation pressures. 17. If the above factors are reckoned with, the “behind-the-curve” argument loses potency. Starting in March 2010, we have so far raised policy interest rates (the repo rate) by 350 bp.
In this context, the Governing Council will closely monitor the risks to the inflation outlook over the medium-term. It has emphasised its willingness and ability to act, if warranted, by using all the instruments available within its mandate. In particular, the asset purchase programme contains sufficient flexibility to adjust its size, composition and duration.