The ECB (European Central Bank) Governing Council acted decisively with the two significant key interest rate hikes totalling 125 basis points in July and September. Further tightening steps have been signalled and will have to follow, in my view. I make no secret of the fact that combating inflation will create burdens. It is likely to temporarily dampen growth.
But doing nothing and letting things run their course is no alternative. Inflation erodes prosperity. It depresses economic participation because it hits the weakest hardest. This puts it at odds with promises to deliver “prosperity for all”. Monetary policy and its toolkit evolve over time.