Like on the painting, we will rise up, fiercely spread our wings, and protect our eggs from the menacing mongrel of inflation. Hence the ECB’s recent move – to raise interest rates by 75 basis points. As my central bank colleagues gathered here tonight will confirm, this major transition in monetary policy was a necessity.
This vigilance is particularly warranted in the light of some signs that monetary policy is encouraging increased risk-taking and contributing to elevated asset price inflation and income inequality. To my mind, this raises two concerns for the long-run efficacy of our measures, which I wish to discuss today.