My aim today is to review the recent evolution of inflation in the euro area, together with the implications for monetary policy. The ECB has held the main policy rate (the deposit facility rate) at 4.0 per cent since last September. At last week’s Governing Council meeting, we indicated that, if our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. ... (full story)