In the early part of this year, the process gained speed, avoiding, however, potentially dangerous cliff-effects of too sharp a drop, and was completed on the 1st of July. A few weeks later, we started raising the key official rates by a significant size (50 basis points in July and 75 in September), aimed at frontloading the exit from their highly accommodative levels.
This radical change in monetary stance mirrors a corresponding sharp change in the economic and inflationary outlook. First, the pandemic fears that drove the economy into recession – not only in Europe – and reduced inflation temporarily to below zero have been overcome.