Retail sales have also been sluggish, falling in March 2014 on a month-on-month basis, and retailers are expecting a poor second quarter. These indicators do not point to an overheating economy and demand-driven inflation. Why, then, do we have above-target inflation? I would like to draw your attention to two main causes, cost-push pressures and exchange rate depreciation.
The economic policy response to the COVID-19 crisis has been swift and aggressive across a broad front in Europe, including the ECB’s monetary policy measures aimed at preserving favourable financing conditions. We stand ready to adjust all of our instruments, as appropriate, to ensure that inflation moves towards our aim in a sustained manner, in line with our commitment to symmetry. 2.