Since my first FOMC meeting last June, my data-dependent, risk-management approach has led me to support the Fed's response of frontloading monetary policy tightening to bring inflation under control. After the swift policy response of the past year, monetary policy is now in restrictive territory.
It could place a strain on the sustainability of private and public debt in some countries and complicate the economic adjustment process for countries which have lost competitiveness. And if interest rates are near the lower bound, lower inflation might translate into a tighter monetary policy stance than warranted, in particular if longer-term inflation expectations are affected.