But as I said, let’s start with the present, as I am sure you are curious to understand our thinking. Yesterday, Governing Council raised the policy rate to 4¾%. This was our first rate increase since January.
When we paused five months ago, we said we needed time to assess whether our forceful monetary policy tightening—425 basis points in less than a year—was restrictive enough to return inflation to the 2% target. Put another way, we were looking for an accumulation of evidence that supply and demand were rebalancing, and price pressures were easing, in line with our inflation target.