Monetary policy measures have strengthened the anchoring of inflation expectations

Abstract

The tightening of monetary policy has stabilised inflation expectations. Inflation expectations have an impact on companies’ pricing decisions as well as on the results of wage negotiations. They therefore directly affect actual inflation rates. When inflation expectations stay in line with the European Central Bank’s (ECB) inflation target – that is, when they are anchored to the target – this will help return inflation to the target level over the medium term.