www.ecb.europa.eu
Speech by Piero Cipollone, Member of the Executive Board of the ECB, at an event organised by the House of the Euro and the Centre for European Reform
Brussels, 27 March 2024
It is a pleasure to be here today.
In recent years, the euro area economy has experienced a series of overlapping demand and supply shocks, which resulted in persistently high inflation.
Due to its dependence on imports hit by those shocks, the euro area also suffered a negative terms-of-trade shock. This acted as an external tax on euro area income that, in practice, was initially absorbed mostly by workers in the form of lower real wages.
The reversal of these negative supply shocks, combined with our restrictive monetary policy, has led to a broad-based decline in inflation, while inflation expectations remain well anchored. This, in turn, has shifted the discussion towards the timing, pace and extent of the reduction in monetary policy restriction going forward.