Pablo Hernández de Cos: Inflation and growth - economic policy challenges

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the Encuentro Foros de Vanguardia, Madrid, 26 July 2022. 

Central bank speech  | 
26 July 2022

Good afternoon. It is a pleasure for me to participate in this event, organised by La Vanguardia. I would like to take this opportunity to explain the ECB's most recent monetary policy decisions, in particular those we adopted last Thursday. Let me first frame those decisions in the context of the current macroeconomic scenario and the inflationary episode. To conclude my address, I will also briefly describe the role that other economic policies can play in addressing the current challenges.

The macroeconomic context

The current context is one of extraordinary uncertainty. Economic activity in the euro area is slowing, weighed down by the war in Ukraine. The economy is being adversely affected by the impact on firms of rising energy and commodity costs and the effects of high inflation on households' purchasing power, along with the persistent supply-side constraints, supply chain disruptions and heightened uncertainty.