Last week’s decision is closely linked to our monetary policy strategy, which stipulates that the appropriate monetary policy response to a deviation of inflation from the symmetric two per cent target is context-specific and depends on the origin, magnitude and persistence of the deviation.
In the context of a long projected period with inflation far above target, the net upside risks to inflation and taking into account that the current setting of the key policy rates is still highly accommodative, it was appropriate to take a major step that frontloads the transition from the prevailing highly-accommodative level of policy rates towards levels that will support a timely return of inflation to our target.