##n again. monetary policy the governing council of the ecb has responded forcefully to the largest euro area inflation surge on record. we raised our key policy rates by a total of 450 basis points between july 2022 and september 2023. we had kept them at those restrictive levels until june this year, with the key interest rates – in particular the deposit facility rate, through which we steer the monetary policy stance – contributing substantially to the ongoing disinflation process. following the two 25 basis point cuts in june and september this year, we decided to lower the key ecb interest rates again at our 2 / 3 bis - central bankers'speeches october meeting, based on our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. we remain determined to ensure that inflation returns to our 2 % medium - term target in a timely manner. our future decisions will ensure that our policy rates will stay sufficiently restrictive for as long as necessary. as we have made clear in our communication, the governing council is not pre - committing to a particular rate path. we will continue to follow a data - dependent and meeting - by - meeting approach to determining the appropriate level and duration of restriction. 3 / 3 bis - central bankers'speeches

. generally, their purpose is to obtain an estimate of where headline inflation will settle in the medium term after temporary factors have vanished. ” in view of the major dislocations of recent years ( the pandemic, the energy shock, the war ), it is helpful to think of headline inflation as currently being driven by three factors : ( a ) pure noise ; ( b ) a reverting component ; and ( c ) underlying inflation. in particular, the economics of dislocations suggest that there is currently a substantial reverting component of inflation that is sufficiently long - lasting not to constitute pure noise but that can also be expected to fade out over the near term. examples of the reverting component include : the passthrough of energy and food cost shocks to other sectors ; the impact of bottlenecks ; and pandemic re - opening effects by which there are temporary mismatches between demand and supply in contact - intensive sectors. these factors contributed to the sharp rise in inflation since the middle of 2021 and, even if there has been some easing or even a reversal in these factors, the adjustment process to these shocks is still ongoing and is not likely to come to a sudden stop. while the adjustment process may also affect medium - term inflation dynamics, the quantitative contribution to inflation is plausibly larger over the near term than over the medium term. since the peak impact of monetary policy is further out than one year, this reverting component of inflation should be less important for monetary policy than the mediumterm underlying component. since the standard measures of underlying inflation typically make a two - level distinction between the transitory and persistent components of inflation, these standard measures should not be taken at face value under conditions in which the slowly - reverting component might be ( at least partly ) mis - classified as contributing to medium - term inflation dynamics. it follows that the interpretation of the standard measures require additional analysis under current conditions to take into account the potential role of the reverting component. before turning to the analysis of the range of indicators of underlying inflation, it is also necessary to recognise that the trajectory of the underlying inflation component can be affected by shocks to the noise and reverting components of inflation. first, even a pure noise shock can have a permanent effect on the price level if a positive inflation shock is not followed by a subsequent negative inflation shock. this holds even more strongly for a shock to the reverting component : since