Pablo Hernández de Cos: Monetary policy in the euro area - where do we stand and where are we going?

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the XXI Congreso de Directivos CEDE, Bilbao, 29 September 2022. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Your Majesty, authorities, ladies and gentlemen,

Let me start by thanking the organisers for the opportunity to address you at this XXI CEDE Congress. Today, I will elaborate on how we can bring price stability back to European citizens in the context of current turmoil as it is the responsibility of the ECB's Governing Council to bring inflation down to 2% in the medium term, the inflation target that operationalises our price stability mandate.

And we have to do this in none too easy times. After a pandemic that has cost more than a million lives in Europe alone, and with a war of aggression in Ukraine, European households are experiencing a drastic surge in their costs of living. Consumer prices in the euro area rose by 9.1 % in August compared to the previous year, an all-time high for the monetary union. The increase in prices has been especially acute in the energy and food components of the consumption basket. But it has become more general over time, as reflected in an underlying inflation rate of 4.3 % in August, another record high, reflecting to a large extent indirect effects of higher energy and food commodity prices through firms' production costs. As recent research shows, this surge in inflation has affected some of the most vulnerable groups in our society, like low-income individuals.