In their most recent projections for the euro area, ECB staff see inflation ranging between 2% and 2.6% this year and between 1% and 2.4% next year. It must be stressed, however, that these projections do not take into account the recent oil price hikes and are based on the assumption that wage pressures will remain subdued.
But monetary tightening could be complemented with changes in the composition of fiscal spending, where the available resources are better targeted to those most in need of support. Inflation imposes a burden on the poorest households disproportionately; and, in the short term, monetary tightening may add to this burden, by constraining aggregate demand and labour market conditions.