As advanced economies experienced a once-in-a-generation surge in inflation, central banks embarked on rapid tightening cycles, with the ECB cumulatively raising interest rates by 450 basis points. Despite aggressive monetary tightening, economies appear to be on track for a soft landing, with recent literature documenting exceptionally low sacrifice ratios during the post-pandemic tightening cycles. This paper explores the strength of several monetary policy transmission channels to identify the factors that contributed to a favourable trade-off for monetary policy stabilization. To that end, we estimate a structural vector autoregression with time-varying parameters and stochastic volatility using euro area data from 2002 to 2023. Empirical evidence suggests that the forceful monetary policy response to the inflation surge helped contain the de-anchoring of inflation expectations and reduced the disagreement about the future path of inflation. The sharp tightening of financial conditions also contributed to disinflation, but this was driven by more responsive systematic component of monetary policy to supply shocks rather than changes in the propagation mechanism of discretionary monetary policy shock via the banking sector. Moreover, we show that the ECB became more reactive to cost-push shocks in the post-pandemic period, particularly those stemming from energy prices, as these infiltrated inflation expectations and were further amplified by the countercyclical response of profits. A medium-scale New Keynesian setup augmented with bounded rationality in the expectation formation process and endogenous uncertainty supports these empirical observations. Model simulations suggest that such disturbances to inflation expectations require an aggressive monetary policy response — especially if the central bank initially attempts to look through the shock — in order to limit the deviation of inflation from target.