Inflation and the ECB’s monetary policy stance

The period of low inflation in the euro area ended abruptly with recovery from the Covid-19 pandemic and the energy crisis. Supply-side bottlenecks and a surge in energy prices have been factors in raising core inflation. Despite the hike in consumer prices, the ECB’s unprecedented monetary policy response contributed to re-anchoring long-term inflation expectations to the new 2% symmetric target and preventing the materialisation of second-round effects.

In this breakfast briefing, Stefano Neri, head of the economic outlook and monetary policy directorate at Banca d’Italia, discusses long-term inflation expectations in the euro area, the limited risks of second-round effects, growth prospects and the ECB’s monetary policy stance.