[1] Starting in December 2021 with the announcement that net purchases under the pandemic emergency purchase programme (PEPP) would end in March 2022, the ECB has been tightening its monetary policy stance in response to the extraordinary surge in inflation amid the pandemic shutdowns, supply bottlenecks and, most importantly, the energy crisis triggered by Russia’s unjustified war against Ukraine.
For a given inflation outlook, the appropriate level and duration of a restrictive monetary policy stance depends on how powerfully and how quickly the economy responds to the tightening of monetary policy.