BCB Director David says de-anchored inflation expectations forced higher rates for longer; adds monetary policy remained effective despite credit stimulus

Idea is that at the end of the calibration process, will remain in contractionary monetary policy stance. BCB is keeping policy contractionary until it is convinced inflation is heading back towards target. BCB is troubled by inflation expectations trouble them the most, especially for 2028. If BCB finds out the output gap is not neutral, BCB will work with that. Don't have a target for the level of outstanding FX swaps. Central bank will not react to every price shock from conflict, but will not tolerate spillover into broader inflation over time.