christine lagarde : press conference introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 8 july 2021. * * * the vice - president and i are very pleased to welcome you to our special press conference. yesterday the governing council unanimously approved the ecb ’ s new monetary policy strategy. this brings to a successful conclusion the strategic review that we have been conducting over the last 18 months, drawing on an immense collective effort by staff at the ecb and the national central banks of the euro area. we have worked within the existing treaty and taken the ecb ’ s primary mandate of price stability as a given. the review has allowed us to challenge our thinking, engage with numerous stakeholders, reflect, discuss and reach common ground on how to adapt our strategy. the new strategy is reflected in the document entitled “ the ecb ’ s monetary policy strategy statement ” that was published earlier today. it is a strong foundation that will guide us in the conduct of monetary policy in the years to come. let me explain the key elements of our new strategy in more detail. to improve the clarity of our price stability objective, and with the aim of better anchoring inflation expectations, we have decided to amend our formulation of the objective. the governing council considers that price stability is best maintained by aiming for a two per cent inflation target over the medium term. a two per cent inflation target is consistent with standard definitions of price stability and provides a safety margin to protect the effectiveness of monetary policy in responding to disinflationary shocks and to guard against the risk of deflation. this specific quantitative target is clear and easy to communicate, and provides a strong anchor for inflation expectations, which is essential to maintain price stability. it replaces the previous double - key formulation of below, but close to, two per cent, which was widely seen as too elaborate and occasionally giving rise to misperceptions about the governing council ’ s aspirations. the new formulation removes any possible ambiguity and resolutely conveys that two per cent is not a ceiling. the governing council ’ s commitment to the two per cent target is symmetric. symmetry means that the governing council considers negative and positive deviations of inflation from the target to be equally undesirable. to maintain the symmetry of its inflation target, the governing council recognises the importance of taking into account the implications of the effective

lower bound on nominal interest rates. in particular, when nominal interest rates tend to be low throughout the business cycle, like at present, the economy operates not too far from the lower bound. episodes in which the policy rate is constrained at the lower bound are often associated with disinflationary pressure. addressing this requires especially forceful or persistent monetary policy measures to avoid negative deviations from the inflation target becoming entrenched. in these conditions, in the face of large adverse shocks, the ecb ’ s policy response will, as appropriate and grounded in a careful proportionality analysis, include especially forceful monetary policy measures. in addition, closer to the effective lower bound, it may also call for a more persistent use of its monetary policy instruments. this may also imply a transitory period in which inflation is moderately above target. the governing council judged that the harmonised index of consumer prices ( hicp ) remains the appropriate price measure for assessing the achievement of our price stability objective. at the same time, we have heard the calls of european citizens for a broader coverage of housing costs in the hicp. the governing council has therefore recommended a roadmap for the inclusion of owner - occupied housing in the hicp, while recognising that this is a multi - year project to be led by eurostat. during the transition period, the main reference index for monetary policy will remain the current hicp, but initial estimates of owner - occupied housing costs will play a supplementary role alongside our set of broader inflation measures and will help us 1 / 3 bis central bankers'speeches assess the contribution of housing costs to inflation. our new strategy confirms the medium - term orientation of our monetary policy, which, since the inception of the ecb, has been an important principle of the strategy. it recognises that monetary policy cannot and should not attempt to fine - tune short - term developments in inflation. monetary policy affects the economy with variable time lags. the medium - term orientation allows us to be forward - looking and respond flexibly to fluctuations in output and inflation. flexibility is important, since the appropriate policy response depends on the circumstances as well as on the source, magnitude and persistence of the shocks affecting the economy. the medium - term orientation also allows us to cater for other considerations relevant to the pursuit of price stability. employment, financial stability risks and climate change are some of the areas that we looked into in greater depth during the strategy review. we have also carefully reviewed the appropriateness of the