It is our duty, as a central bank, to ensure that the Phillips curve reasserts itself at a steady rate of inflation that is in line with our medium-term objective of below, but close to, 2%. Our mission is not yet accomplished and we must remain patient and persistent. Patience is required for inflationary pressures to show through convincingly in the data.
The euro area’s economic environment is improving, and the negative tail risks to inflation expectations, which were so visible at the start of our asset purchase programme, have virtually disappeared. But measured inflation rates are exceedingly volatile and metrics of underlying price pressures remain anaemic. The entire distribution of inflation expectations still needs to shift a fair distance to the right.