This means that, even if the expected rise in inflation does not materialize, central banks should avoid implementing aggressive policy measures in the short run and instead respond gradually over time. V. The COVID-19 Crisis and Its Policy Implication Japan's long experience with monetary easing, and in particular the three different regimes just described, provides important lessons.
Since the summer of 2021, the extraordinary increase in energy costs has gradually become the most important factor holding back motor vehicle output (Slide 7, left-hand side). Demand-side factors, by contrast, continue to support production. More generally, ECB staff analysis shows that a persistent increase in energy prices significantly and persistently lowers potential output across euro area countries (Slide 7, right-hand chart).