ECB's Lane: The typical lags in monetary transmission mean that the full economic impact of the considerable monetary tightening over the last year will only play out over the next couple of years.

• In relation to the banking channel, transmission will continue to strengthen with the ongoing repricing of bank funding, while the repricing of maturing fixed-rate loans will place further upward pressure on aggregate lending rates.
• The decline in liquidity due to the further repayment of TLTRO funds and the shrinking of the APP portfolio will further strengthen transmission via the banking channel in the coming months.
• Furthermore, any deterioration in the macroeconomic environment would also reinforce the banking channel by reducing loan demand and increasing credit risks.
• In combination with the broader banking, financial and economic incoming data, the July BLS will help us to update our assessment of the banking channel of monetary policy tightening.
• In particular, as the cumulative tightening in monetary policy gains further traction, the countervailing impact of these factors will plausibly decline, with fading profits or a slowdown in household incomes amplifying the impact of the credit channel.

via ECB