Even if uncertainty and unforeseen events, have in the past and will in the future prevail, the ECB has had a good start and achieved credibility with the public. This has been achieved by means of a framework that on the one hand delivers the determination necessary for credibility and on the other gives the flexibility that is essential to react to unforeseen events.
This has eased banks’ balance sheet constraints, and encouraged them to extend new credit or continue rolling over maturing loans to firms. As the inflationary pressures that we were still observing until last summer, receded rapidly, we have also been able to grant unlimited access to central bank credit at a sharply decreasing cost.