But the Eurosystem decided also against adopting an inflation-targeting framework. Not surprisingly, it takes some time until it is widely recognised that the strategy chosen by the ECB is neither monetary targeting nor inflation targeting nor even a mixture of these two approaches well known to observers. It is a new strategy designed for a unique situation with which the ECB was confronted before the start of Stage Three. Nevertheless, I found recent critique of not having adopted either a monetary or an inflation targeting strategy not very convincing since it was not accompanied by any evidence of why the reason for the cautious two-pillar approach of the ECB were not justified. Communication I have so far emphasised the virtues of flexibility.
High uncertainty complicates communication with the public and the financial markets.
As a result, one cannot rely on simple communication devices, but needs to tell the full story. Some observers have wrongly taken the comprehensive assessment of the prospects for, and risks to, price stability to be synonymous with an inflation forecast, which is customarily at the centre of direct inflation targeting strategies. However, the broadly based assessment comprises an analysis of such a wide range of indicators and information variables including various internal and external forecasts that it cannot be reasonably summarised in a single number or chart. Instead, the Eurosystem s strategy provides an honest account of all the pieces of information that have been taken into account in the decision-making process. The ECB s Monthly Bulletin summarises the analysis of the information leading to the decisions of the Governing Council and provides the most recent statistical information on the euro-area economy.