The most important explanation for fact that the current economic impact of the oil price increase has been so benign lies in the achievements of monetary policy having become transparent, systematic and well aware of the problem of time inconsistency.
To sum up, taking into account today’s decisions, the economic analysis indicates that we may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on. A cross-check with the signals from the monetary analysis confirms this picture.