In the accounts of February ECB meeting, it was argued that monetary policy in the current environment was to “ensure that inflation expectations remained firmly anchored ” and to “avoid the risk of the prevailing high inflation becoming entrenched.”
“Caution was expressed about basing the Governing Council’s assessment on wage data which were only available with a lag. In this environment, the main risk was no longer of tightening monetary policy too early but too late,” the accounts noted.
It’s also argued that “an earlier monetary policy normalisation would reduce the risk of abrupt tightening later on, which could potentially be associated with high economic and social costs.”
“In the light of the increased uncertainty and the heightened upside risks to the inflation outlook, the general view prevailed that the Governing Council should convey its increased alertness and should monitor incoming information carefully, in particular regarding second-round effects.”
