21 Of course, when taking our decisions, we are not mechanically bound by such observations on monetary policy, despite the intellectual elegance of the underlying models. Nevertheless, I can recognise the pattern of the ECB’s interest rate decisions in this stylised characterisation.
The lower-frequency component of the interest rate cycle – which is driven by long-lasting or persistent developments in policy rates – influences economic behaviour and, ultimately, the evolution of price developments much more than the high-frequency component associated with the exact timing and magnitude of any one policy decision.