We launched the pandemic emergency purchase programme (PEPP) to help stabilise financial markets and ease our monetary policy stance considerably. The PEPP is temporary, targeted and proportionate. It addresses the specific shock at hand, and aims to repair the economic damage and the resulting downward pressures on inflation wrought by the pandemic. In addition, it was also vital that we limited the risk of a credit crunch. So we substantially eased the conditions under which banks can obtain liquidity under our targeted longer-term refinancing operations. Banks can now borrow from the ECB at interest rates which can reach -1%, under the condition that they are lending to the real economy. Six months after we introduced our measures, our policy package has stabilised markets, protected the supply of credit and supported the recovery. This, in turn, should support the return of inflation towards our medium-term objective and safeguard price stability. At the same time, the uncertainty of the current environment requires a very careful assessment of the incoming information, including developments in the exchange rate, with regard to its implications for the medium-term inflation outlook. The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. When you look at the past six months, the ECB has not been the only game in town. Our measures have been complemented by forceful fiscal responses at both national and European levels.

Again, this experience is not unique to the United States, indicating that it stems from factors common across countries, rather than issues unique to our economy. Indeed, most inflation-targeting advanced economies have struggled to achieve their inflation goals on a sustained basis over the past decade. This brings us to last week’s announcement and the issuance of a new consensus statement of our policy framework. It is a culmination of extensive outreach and conversations with communities and stakeholders across the country, careful and thorough analysis, and active 45 1/2  BIS central bankers' speeches  discussion and debate among Committee participants.4,5 We took important lessons from the experience of the past decade, reassessed the evidence, and looked at the challenges ahead of us. All this effort was worth it: this new statement means we are better positioned to achieve our goals. In fact, the process worked so well, we’ve committed to repeating it roughly every five years! The new framework statement directly and effectively addresses the problems caused by a low neutral rate and persistently low inflation. First, it stipulates that, following periods when inflation has been running persistently below 2 percent, a temporary overshooting of the longer-run inflation target will likely be desirable to keep inflation and inflation expectations centered on 2 percent. Second, it makes clear that we seek inflation that averages 2 percent over time, consistent with our longer-run target. Finally, the statement makes unequivocally clear that we seek maximum employment and will aim to eliminate shortfalls from this broad and inclusive goal.