According to the September PMI indicator, for instance, overall euro area services business activity contracted when compared with August, while manufacturing output continued to expand, and at a better pace than in August. This asymmetry means that the impact of the pandemic varies across countries, as some depend on heavily affected sectors, such as the services sector, more than others.
Based on my forecast for the economy, I expect monetary policy to be restrictive until there has been a sustained reduction in core personal consumption expenditure (PCE) inflation, which excludes food and energy. Food and energy prices tend to be volatile, so focusing on core PCE inflation is a good guide to inflation pressures in the near and medium term.