monetary dynamics – slow growth of broad monetary aggregates and very weak credit – suggests that inflation pressures, beyond the ups and downs of short - term price adjustments, will likely remain subdued for an extended period of time. some odyssean elements are evident as well in the ecb ’ s statement. but, again, in the following sense : with forward guidance the governing council has meant to re - assert – not to suspend – its strategy. we have clarified how our strategy is going to guide us in the difficult conditions that we expect to prevail going forward. we will be guided by two elements of our strategy, in particular. first, our primary objective. by its objective, the ecb is mandated to the pursuit of a positive inflation rate below 2 %. in accordance with our strategy, this means aiming for inflation rates below but close to 2 % over the medium term. the 4 july forward guidance is an expression of commitment to this objective and of determination to apply the policy prescriptions which descend from it. the second element of our strategy which will give us a sense of direction is the strategy ’ s binary analytical framework. as i said, inflation and the economy need to be interpreted : falling inflation in conditions of surging productivity and a booming economy is not bad news. falling inflation when aggregate demand is persistently dragging, and credit and money are consistently unsupportive of households ’ consumption and firms ’ investment can be a problem for a central bank that is devoted to price stability. the monetary part of our analysis is there – in our forward guidance formulation – to robustify our assessment of the inflation outlook and convey the appropriate monetary policy implications that derive from that assessment according to our strategy. against the conditions that we see prevailing over a meaningful horizon, our guidance includes an easing bias. this conveys the notion that we have not reached the lower bound on our key interest rates. we have not run out of ammunition. further cuts in policy rates remain an option for the ecb if the outlook on price stability so warrants. the ecb ’ s forward guidance has contributed to more clarity over our assessment of the outlook and our reaction function. our forward guidance has contributed to more stable money market conditions and has helped to anchor market expectations more firmly. it also ensures that our monetary policy stance is not excessively vulnerable to shocks that are disconnected from the underlying economic and monetary conditions in the euro area. references blinder, a., m. ehrmann, m

##ring. we will take any measures necessary to ensure that we deliver on our inflation target of 2 % over the medium term. that is why, at our last governing council meeting, we recalibrated our policy measures, allowing for a step - by - step reduction in the pace of our net asset purchases, moving gradually from around €80 billion per month to €20 billion per month over the course of 2022. 2 we also ensured that we have the flexibility to respond to a range of circumstances. at the same time, we concluded that monetary accommodation is still needed for inflation to settle at 2 % over the medium term. strengthening supply monetary policy works on the demand side of the economy by stabilising output around its potential level. but the level of potential output is mostly affected by the actions of other policymakers, besides the hard work of people and the strength of businesses. and this brings me to the second area on which we need to build : strengthening supply. there are structural changes taking place in the economy today which could have a profound impact on the supply side of the economy. the green transition, the digital revolution and demographic shifts have all been accelerated by the pandemic. if we are to achieve sustainable growth in the future, supply and demand need to move together as the economy adjusts to these changes. for example, the economy is already becoming greener as consumers change their behaviour and new regulation bites. and i am confident that this will ultimately provide a new source of growth for europe : nine of the top 20 global players developing green - digital patents are european. 3 but if supply capacity cannot adjust quickly enough, the transition could be bumpy. one possible consequence, as i have discussed elsewhere, is greater volatility in energy prices, as bridge technologies like natural gas have to be used to fill gaps in energy production. 4 and there is a risk that this could affect public confidence in decarbonisation. so the solution has to be to accelerate investment in renewables – and other green technologies – so that they come 2 / 5 bis central bankers'speeches online faster. we are fortunate in europe that our policy response has not only focused on stabilising demand, but also on redirecting supply towards the sectors of tomorrow. ngeu is a unique tool that can provide the investment impetus we need. it is critical that it becomes a complete success. you, national parliamentarians, now have the opportunity to ensure a swift and effective implementation of the reform