3/8  BIS - Central bankers' speeches  An equally important aspect of the current monetary policy response relates to the existing high level of uncertainty, which affects both the nature of the shocks and their persistence, and how our measures will ultimately influence inflation throughout the monetary policy transmission channel. In light of this, firms' and workers' long-term inflation expectations are key to defining the optimal response. If the expectations remain firmly anchored to the target, as there is full confidence in the ECB's commitment to getting inflation back to its target, the monetary policy response could be less forceful. Conversely, if they rise above the target, monetary policy will have to act more forcefully. As I mentioned earlier, inflation surged in the euro area and has gradually proven more persistent and spread to a higher number of goods and services in the consumption basket. This has led to successive upward revisions to projected inflation, including the medium-term projections. In tandem, second-round effects via wages or mark-ups have been moderate, but the greater persistence of inflation has increased the risks of a deanchoring of medium-term inflation expectations. Against this backdrop, the ECB's response has been to tighten monetary policy, combining gradualism and forcefulness in an effort to keep inflation expectations anchored. The normalisation of our monetary policy began in late 2021 with the announcement that net asset purchases would cease by the end of the first half of 2022.
As an introduction to this FSR, we are extremely thankful to the roundtable participants that have accepted my invitation: •  A long-standing member of the Federal Reserve board: Governor Tarullo, thank you. It’s a privilege to welcome you today given your active participation and role in setting international financial regulation;  •  A Governor of one of the most advanced central bank in the area of macroprudential policy in Asia: Tae Soo Kang, Deputy Governor of the Bank of Korea, in charge of Financial Stability. •  A very active ambassador for macroprudential policy: José Viñals, Financial counselor and Director of the Monetary and Capital Markets Department of the IMF. •  A distinguished expert on the financial sector worldwide and its regulation: Douglas Elliott from the Brookings Institution. Thank you all for being with us today. As you know, for each issue of our FSR, we always try to pick topics that are both analytically complex and relevant to current policy-making. This is clearly the case with macroprudential policies. Indeed, macroprudential policy is a critical dimension of the public policy response to the crises we have experienced since 2008 and has figured prominently in the lessons we have drawn from them. Let me mention three of these lessons. BIS central bankers’ speeches  1  •  First, the oversight of individual components of the financial system is not enough to preserve financial stability. Having robust financial institutions is a prerequisite for ensuring financial stability but it is not in itself sufficient.