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The COVID crisis caused a steep contraction, but the recovery has begun rapidly. Accommodative economic policy and the vaccination programme are supporting economic recovery. Inflation has recently accelerated, but will slow next year.

During the COVID crisis, the Eurosystem has purchased securities on the markets and granted banks loans on favourable terms. These measures have helped avoid a deep recession and deflation in the euro area.

Inflation, or the rise in the general level of prices, has accelerated due to the rise in commodity prices and the recovery in the economy. Inflation will slow next year. Monetary policy will be used to ensure that inflation remains stable.

The ECB’s new monetary policy strategy is aimed at inflation of 2% over the medium term. The target is symmetrical. Both negative and positive deviations from this target are seen as equally undesirable.

Growth in the euro area economy is robust, but the outlook is overshadowed by production bottlenecks and the possibility of new coronavirus variants. Monetary policy will maintain favourable financing conditions for a sufficiently long period for the economy to continue its recovery.

Inflation expectations play a key role in inflation projections. Different measures of inflation expectations point towards inflation remaining below the ECB's 2% target in the coming years.