🧵 The energy shock and the reopening of the economy led to high inflation, says Executive Board member Fabio Panetta.
We have tightened our monetary policy to prevent inflation becoming entrenched and we now need a data-dependent approach
https://www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230216~a297a41feb.en.html
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Panetta: As the energy shock abates and credit conditions tighten, the risks to the inflation outlook have become more balanced.
It will take time for this to be fully reflected in retail prices across the economy
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Panetta: When we were normalising rates, the pace of adjustment was key.
But with rates now moving into restrictive territory, it is the extent and duration of monetary policy restriction that matters
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Panetta: By smoothing our policy rate hikes – that is, moving in small steps – we can ensure that we calibrate our policy stance more precisely.
This will allow us to return to our 2% inflation target without undue delay, while reducing the risk that we tighten too much
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