happens quite fast, especially if expectations are rational? besides, models are bound to miss regime shifts and to struggle with the deep impact of tail events. and since the last significant inflation surge had occurred in the 1970s, models arguably underestimated the persistence of inflation when it started to climb. 5 incidentally, the false sense of knowledge resulting from an overreliance on models was also at the core of the recent review of the bank of england ’ s forecasting approach by ben bernanke. this review could also inspire us in the eurosystem. 6 on the topic of forecasts in particular, a major issue is that analysts tend to focus on the point estimate of inflation at the end of the forecasting horizon, which is about two to three years ahead. the significant uncertainty surrounding projections is only a second - order consideration. this is an issue if, like me, you believe that policymaking is about risk management. 5 wunsch ( 2022 ). 6 see also schnabel ( 2024 ). one can think of two technical remedies : fan charts and alternative scenarios. fan charts have the important advantage of providing a broad idea about projection uncertainty. however, fan charts are only as good as the assumptions used to build them. for instance, many fan charts reflect either past forecasting errors — which is not useful if uncertainty rises — or normally distributed shocks calibrated against past empirical moments. fan charts also routinely ignore model uncertainty itself. in the end, alternative scenarios reflecting various modelling assumptions and shocks might be easier to communicate to the public and might better convey differences of views among governing council members. my second material dissent concerned the speed of disposal of the asset portfolio accumulated through qe. i call to mind the additional year of reinvestment under the pandemic emergency purchase programme ( pepp ) sanctioned in december 2021, setting gross purchases in stone until the end of 2024. at the time of this decision, headline inflation was at 5 % and core inflation was at almost 3 %, but indeed our inflation projection for the end of the projection horizon was at 1. 8 %. now, with the pandemic behind us and monetary policy being normalised on multiple fronts, pepp reinvestment is being continued to honour an old promise. fortunately, the impact of an additional year of reinvestment is limited. overall, i disagreed with the revised forward guidance and the slow unwinding of the accumulated portfolio of asset purchases out of

s box : never - ending mission creep and ultimately, politicisation would loom large. let me now take these issues on one at a time. climate change on climate change, i have gone on the record on two key occasions in 2021 and 2023. as you might guess, jens had already made interventions in 2019. 28 28 wunsch ( 2021, 2023b, 2024b ), weidmann ( 2019b, 2021a, 2021b ). there has been a growing chorus of voices calling on central banks to take a more proactive role in addressing climate change. while i acknowledge the criticality of a successful climate transition, let ’ s keep in mind the inherent limitations of monetary policy in dealing with allocative efficiency issues. monetary policy is a blunt instrument and one unfit to tweak relative prices in socially desirable ways. to achieve the latter, an array of fiscal instruments are available which embody the key virtues of being quick, targeted and reversible. admittedly, my view is a minority one within the ecb governing council. i nevertheless take some comfort in the fact that this view is more popular in the anglo - saxon world. chairman powell famously said last year that “ we [ the fed ] are not, and will not be, a climate policymaker ”. another source of relief for me is that integrating climate change in monetary policy has so far remained a largely conceptual discussion. the actions taken to tilt corporate bond purchases and the collateral framework have been rather symbolic. i would be more concerned if actions went beyond symbols in the future. that said, when discussing climate change in relation to monetary policy instruments, one should distinguish between direct action on relative prices and a risk - based approach. a risk - based approach should be understood as recognising the higher risks of default at the firm level arising from exposure to climate developments or policies. in that case, it is natural to consider that risk when implementing monetary policy through asset purchases or when accepting collateral. central banks impose similar requirements on the commercial banks they supervise. as jens put it : “ [ c ] entral banks should practise what they preach ”. central banks should factor in climate - related financial risks into their risk management, as they do for many other risks. beyond default risks at the firm level, central banks also look at climate risks from a financial stability perspective. here, stress tests are a relevant tool. these should consider the relatively low duration of bank balance