In July we began to provide explicit indications of our monetary policy stance, announcing that the official interest rates would remain at or below the then current level for an extended period, in consideration of the outlook for inflation, the weakness of the real economy, and monetary and credit dynamics. This forward guidance attenuated the volatility of short-term interest rates.
The rapidity of the fall in inflation has surprised the main forecasters, who have revised their short- and medium-term expectations downwards. This pattern has been more pronounced in the countries directly hit by the sovereign debt crisis, but it is common to the entire euro area.