In the ECB’s Governing Council, we have been clear that two elements of our policy stance will be key: we will have to bring rates to “sufficiently restrictive” levels and keep them there “for as long as necessary”. Both elements are affected by uncertainty about the persistence of inflation and about the strength of the transmission of monetary policy to inflation.
Setting the right “level” and “length” will be critical for our monetary policy as we continue our tightening cycle. In my remarks today, I will explore why the inflation process has become more persistent and what this implies for our policy stance.