The strong downward sloping ‘term structure’ of inflation expectations in the CES suggests that consumers in the euro area continue to perceive the current spike in inflation as clearly fading out over time. They expect inflation to return closer to the levels seen in the past, albeit to remain above two per cent for some time (Chart 15, left panel).
This is entirely appropriate and reflects both the size and nature of  the shock that we have experienced and the limits on monetary policy in a low interest rate world. [1] This change has been accompanied by a shift in the government's broader fiscal strategy.