At the same time, inflation dropped markedly in September, including due to strong base effects, and most measures of underlying inflation have continued to ease. The past interest rate increases continue to be transmitted forcefully into financing conditions. This is increasingly dampening demand and thereby helps push down inflation.
ECB Governing Council Eyeing 2% Inflation Target
The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. Based on its current assessment, the Governing Council considers that rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.
Rates to Remain High Until Inflation Goals are Met
The Governing Council’s future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to ensure such a timely return. The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
In any case, the Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its medium-term target and to preserve the smooth functioning of monetary policy transmission.