statements, the inflation target would be changed only if sharp and long - term deviations from the target occur due to factors beyond the control of the monetary policy such that the medium - term targets no longer make sense. within this framework, while considering the possibility that inflation might be exceeding the target for a while in the short run, the central bank maintains the 4 percent inflation target hinging on the evaluation that the general trend of inflation is downwards. the forecasts presented in the inflation reports will continue to refer to two - year periods. in phases when inflation is above the target, the forecasts presented in the inflation report become more important. the forecasts inform the public about the path that inflation will follow while moving towards the medium term target. in other words, the reference value established for economic units is the inflation forecast in the short - run and the inflation target in the long - run. another message that inflation forecasts contain is the monetary policy stance. the answer sought while forming forecasts and monetary policy outlook in the inflation report is : “ what is the monetary policy stance that will keep inflation close to the target in the medium - term? ” the monetary policy stance in this sense does not only consist of the current level of shortterm interest rates. monetary policy stance indicates the prospective path that short - term interest rates will follow in a period that extends from today to medium term. sharing with the public the interest rate assumptions that form the basis of forecasts, though qualitatively, is a remarkable step towards enhancing the transparency and predictability principles that are essential for inflation targeting. communicating with the public about the possible central bank policies influences mediumterm market interest rates via expectations and strengthens the transmission mechanism. however, it should be reminded once again that the monetary policy stance path pronounced in the inflation report is produced according to currently available information and that each new data release related to the medium - term inflation outlook would necessitate the revision of the future monetary policy stance. under the inflation - targeting regime, revisions in the monetary policy stance are not an exception, but a rule. thus, the monetary policy stance established according to currently available data should not be interpreted as a commitment. any unforeseen change in the variables that affect inflation outlook calls for the re - definition of the monetary policy stance. what is important here is to share openly with the public the reasons of the monetary policy stance update. as a matter of fact, the central bank explains, via inflation reports

mario draghi : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, at the econ committee of the european parliament, brussels, 9 july 2018. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, it is a pleasure to be back at the european parliament before your committee. since we last met, the ecb ’ s governing council has taken important decisions on the recalibration of our monetary policy stance after september this year. in my remarks today, i will outline these decisions and explain the assessment of the current economic environment on which they were based. following the recent euro area summit, i will also take this opportunity to discuss the future of our economic and monetary union ( emu ), pointing to priorities for the near term from an ecb perspective. economic and inflation developments the euro area economy grew by 0. 4 % during the first quarter of 2018, marking five years of continued economic expansion. underlying economic fundamentals remain solid, notwithstanding some moderation in growth at the beginning of the year. the labour market has improved notably over recent years. employment has risen by 8. 4 million since mid - 2013, and is growing in nearly all euro area countries. the unemployment rate stood at 8. 4 % in may, its lowest level since december 2008, and labour force participation now stands at an all - time high. looking ahead, the latest eurosystem staff macroeconomic projections foresee average annual growth of 2. 1 % in 2018, 1. 9 % in 2019 and 1. 7 % in 2020. while uncertainties related to global factors, including the threat of increased protectionism, have become more prominent, the risks surrounding the euro area growth outlook remain broadly balanced. of course, we continue to closely monitor developments. according to the eurostat flash estimate, headline inflation increased to 2. 0 % in june from 1. 9 % in may, reflecting higher rates of energy and food inflation. excluding these more volatile items, inflation decreased from 1. 1 % in may to 1. 0 % in june. as the economy continues to grow and slack is absorbed, supporting rising wages, underlying inflation is expected to pick up. recent wage agreements in several countries point to a continuation of these favourable dynamics. i will discuss the inflation outlook in more detail as i explain the monetary policy decisions taken by the governing council in june. the ecb