the unemployment rate still high and capacity utilization low, resource slack is likely putting downward pressure on prices. in addition, market measures of longer - run inflation expectations are at the low end of the range they have been running since last november. bis central bankers ’ speeches putting these factors together, my outlook is for overall inflation over the medium term to fall back towards core and remain below the 2 % level i see as consistent with the price stability leg of the fed ’ s dual mandate. monetary policy and the dual mandate in my view, central banks should focus on medium - term inflation. over shorter periods, measured inflation rates are affected by all sorts of short - term influences, such as fluctuations in food and energy prices that are beyond the control of monetary policy. furthermore, there are significant lags before policy actions influence inflation. so reacting too strongly to short - run influences simply adds noise to the policy - making process. so, by this appropriate standard i think inflation likely will be below our goal of 2 %. and of course, unemployment is much above its natural rate. thus, at the moment, there is little conflict between our two goals. both suggest at least some additional monetary policy accommodation would be helpful. however, given how truly badly we are doing in meeting our employment mandate, i argue that the fed should seriously consider actions that would add very significant amounts of policy accommodation. such further policy accommodation does increase the risk that inflation could rise temporarily above our long - term goal of 2 %. but i do not think that a temporary period of inflation above 2 % is something to regard with horror. i do not see our 2 % goal as a cap on inflation. rather, it is a goal for the average rate of inflation over some period of time. to average 2 %, inflation could be above 2 % in some periods and below 2 % in others. if a 2 % goal was meant to be a cap on inflation, then policy would result in inflation averaging below 2 % over time. i do not think this would be a good implementation of a 2 % goal. 1 with this in mind, i want to discuss the nature of policy - making under a dual mandate when we are far from our goals. what ’ s a central banker to do? ( warning : math ahead ) normally, the deviations of the real economy and inflation from our objectives are small enough that any conflicts are minor. and the well - known taylor rule captures normal policy adjustments well, appropriately weighting output gaps

##s, eurosystem central banks committed last february to implement sustainable and responsible investment strategies and to report the first results by end of 2022. banque de france ’ s policy has been exemplary since 2018 regarding the management of its own funds, whose alignment on a 2° c objective is already effective. we won ’ t stop there though : we started to exit from non - conventional oil and gas earlier this year, we announced that we are exiting totally from coal by end 2024. we now commit to work toward aligning our own portfolios with a 1. 5°c objective. one additional word about the international context of these developments. here again, we saw a major improvement this last year with the new american involvement : climate - related issues are now firmly on the agenda of the g20, the g7, the fsb and all other standard setting bodies. the ngfs, created in paris in december 2017, is a unique knowledge hub. it now has 95 members, including the us fed since last december and this number will still grow in coming weeks. the banque de france provides its global secretariat with 15 staff, and we created last april our climate change centre chaired by nathalie aufauvre. we are indeed making good progress across the board. but each year that passes without sufficient emission reductions makes the issue more severe, and the solutions more radical. to grapple with this dynamic situation, it is imperative that we are able to better understand and forecast the macroeconomic impacts of climate developments. 2. an imperative for the year to come : forge models that gauge the interaction between climate and the economy one aspect of the ecb ’ s action plan launched on the back of the strategy review may have received too little attention : macroeconomic modelling and scenario analyses. the challenge is huge as we face a triple source of uncertainty : first, how climate change will materialise, second, what the transition could look like and, third, how both will translate to the macroeconomy. the ngfs has produced detailed macro financial scenarios and the corresponding data that provide the most comprehensive framework to date for financial risk assessment. to make such scenarios possible, the central banking community – with a strong involvement of bank of england and banque de france among others - has collaborated with first tier research institutes in climate science and economic modelling. this is a huge step forward. our objective is now to propose a common set of plausible and differentiated futures, built with the best available science and