In general, the horizon depends on a number of factors, such as whether the shocks are temporary or permanent and on their potential for becoming entrenched in pricing decisions. In any event, the central bank has to preserve its credibility, thus ensuring that expectations remain consistent with the declared policy objective.
The third aspect of the monetary policy strategy, and one which I will discuss in some detail, is the ECB’s strategic framework. An important element of this framework is the “two-pillar approach” by which an economic analysis is cross-checked against an analysis of the development of monetary aggregates.