unprecedented by major advanced countries over the past 40 years. one useful lesson on forward guidance critics are largely arguing with the wisdom of hindsight. that said, looking back, there is probably one useful lesson. our reliance on forward guidance on rates was perhaps excessive in principle in the face of exceptionally large and unexpected shocks, and too rigid in its substance. as i have said previously, iv we cannot totally bind our hands with rules, and should keep some element of discretion facing unexpected data or events. forward guidance is never setting policy on auto - pilot. there will always be an element of judgement, including about the distribution of risks around the staff projections. central banks should page 7 sur 13 be predictable, but not pre - committed. lift - off from the effective lower bound was double - locked, being both state contingent ( three inflation criteria ) and sequenced after the end of net asset purchases. with more flexibility, the first interest rate increase could have occurred earlier than july 2022 ; but it is unlikely that this would have been more than one or two meetings before. in the grand scheme of things, it would not have changed very much because financial conditions had already anticipated future rate increases through an increase in medium - to long - term interest rates. in the future, i wouldn ’ t rule out a certain return to forward guidance, but seen as more indicative, more statedependent … and more modest – i. e. less powerful as an instrument. 2. now, “ too much ”? the alternative criticism is not about the past but about the present situation, i. e. that we would have already done too much and run the risk of tipping the economy into recession. i will not focus on the discussion of our last 25 bp hike on september 14. while i can fully understand this discussion, my analysis is of our broader 450 bp increase since july 2022. some good news … headline inflation has already fallen back from its peak of 10. 6 % in october last year to 5. 2 % in august, and strangely enough this criticism contains elements of good news. firstly, it implies that monetary policy has indeed had a powerful effect on the economy. not so long ago, there was a debate about whether the is curve had become fairly flat and our instruments were weak in combatting inflation. second, it shows, at least in several countries including france, that the inflation psychology has switched, with receding concern over upside inflation risks. our resolute monetary policy over

the past year was indeed intended to break a self - sustaining inflationary psychology. households ’ and firms ’ inflation expectations have peaked, supporting this assessment. our latest monthly business survey, released a week ago v, shows that business page 8 sur 13 leaders are adapting their selling prices accordingly. for the first time in august, the share of industrial firms that have decreased their selling prices ( 6 % ) is larger than the share of firms that have increased them ( 4 % ). … but risks to be rightly assessed however, the criticism that we have done too much misses two points in my opinion. it somewhat overestimates the risks to growth : what we presently see – and forecast – is a slowdown, not a recession ; and employment remains at record highs, which is a positive surprise. and it underestimates the persistence of inflation. headline inflation has indeed come down rapidly. but regarding underlying inflation, the news is less clear - cut. the hicpx rose to 5. 7 % in march this year but fell back to 5. 3 % in august. in the eurosystem, we look at a battery of indicators and those that try to identify instant inflation are lower than this, below 3 % ; they all point in the right direction. nevertheless, annual nominal wage growth remains sustained, although showing early signs of peaking : it is page 9 sur 13 forecasted to reach in average 5. 3 % in the euro area in 2023, and 4. 3 % and 3. 8 % respectively in 2024 and 2025. furthermore, some commentators talk about “ the difficulty of the last mile ” in the return of inflation back to the 2 % target. however, this phrase supposes nonlinearities in the phillips curve, which have not been really identified in the european case. and some suggest that as a result we should accept that “ nearenough ”, say 3 %, is close enough to target rather than set a much tighter policy in the pursuit of 2 %. i am not fixated on 2. 0 % to the nearest decimal place, but i do believe that it would be very counterproductive to change or relax our inflation target, either explicitly or implicitly. one lesson about the future just like the criticism about the past, this unwarranted criticism can nevertheless serve a useful lesson. the risk is not that we have already done too much. it is possibly that we could do too much in the future. let me elaborate