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The monetary policy response to high inflation

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After a long period of below-target inflation, euro area inflation surged in the course of 2021 and 2022. In response to rising inflationary pressures the ECB sharply raised its policy rate from July 2022 onward. This, together with an end to and then a reversal of the ECB’s asset purchases, was aimed at bringing back inflation towards the 2% target in the medium term. In this analysis we assess the drivers of recent inflation developments in more detail, focusing on the contribution of monetary policy. Secondly, we describe the transmission process of the monetary policy tightening.

Published: 06 August 2024

By: Paolo Bonomolo Minke van der Heijden Marco Hoeberichts Jip Italianer Inge Klaver Sebastian Rast

DNB Analysis - Monetary policy response to high inflation

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