in effect standing by while bubbles and excesses threaten ﬁnancial markets. ” i believe paul volcker hits the nail on the head here : what central banks need to bear in mind is that an enduring easy - money policy can contribute to the build - up of imbalances in the ﬁnancial system. these could, in the long run, pose a threat to price stability. 2. 3 measuring inflation however, we should also think about whether our target variable, the rate of inﬂation, is currently being measured correctly. monetary policy is based on the harmonised index of consumer prices ( hicp ) for the euro area. in principle, it best meets the requirements of a measure for price stability within the euro area, in terms, for instance, of the breadth of the data collected and comparability within europe. the hicp also contains rents. however, a lot of people own their own ﬂats or houses. yet owneroccupied housing is absent from the hicp basket of goods. it is undisputed that the hicp should really include this component. many national consumer price indices incorporate it, and give it some weight – in the united states, for instance, it makes up 24 % of the index and it contributes a sizeable 10 % to the german index. its inclusion may consequently impact the level of the measured inﬂation rate. ecb experts have calculated that, in the past, the inclusion of such a component would have inﬂuenced the headline rate by up to 0. 2 percentage point in individual quarters. [ 17 ] in the long term, however, i expect that average hicp inﬂation would not change much. the reasons why owner - occupied housing is not included in the hicp are of a technical and methodological nature. i personally would be willing to accept some methodological shortcomings if that meant that we were able to better reﬂect people ’ s real - life situations. this would allow us to better fulﬁl our mandate of securing price stability within the euro area. 2. 4 instruments of monetary policy however, we cannot do so without the right tools. in recent years, we have seen the potential limits of traditional interest rate policy. we therefore need other tools in our toolkit to deal with such exceptional circumstances. monetary policy instruments should meet two criteria. https : / / www. bundesbank. de / en / press / speeches / change - and - continuity - 82

2 / 4 / 2020 change and continuity | deutsche bundesbank change and continuity speech delivered at deutsche borse ’ s new year ’ s reception 03. 02. 2020 | eschborn | jens weidmann 1 introduction 2 monetary policy strategy 2. 1 communication 2. 2 deﬁnition of the monetary policy aim 2. 3 measuring inﬂation 2. 4 instruments of monetary policy 2. 5 additional aspects 3 conclusion 1 introduction dear joachim faber, dear theodor weimer, chere christine, ladies and gentlemen, there ’ s a saying that twice is repetition and three times is a tradition. so it is a pleasure, and a privilege, to speak to you here today in what it is my third speech at deutsche borse ’ s new year ’ s reception. for me, this event is one of the highlights at the beginning of the new year, not least because of the impressive setting. and it is no less gratifying to see all these familiar faces once again. https : / / www. bundesbank. de / en / press / speeches / change - and - continuity - 824754 1 / 11 2 / 4 / 2020 change and continuity | deutsche bundesbank but discovering unfamiliar faces can be fascinating as well. you will have a great opportunity to do just that if you happen to come here again over the next few days. you see, when deutsche borse is not holding its new year ’ s reception in this hall, it is exhibiting photographs from its own art collection here. some of these pictures can be found up here on the gallery, including photos from a series taken by christian borchert. he took portraits of families at home, usually in their living rooms. years later, he came back to photograph them again. his images show how people change, yet stay the same. things get particularly fascinating when you consider how much these families'circumstances changed. the ﬁrst pictures date back to the gdr era ; the last were taken in post - reuniﬁcation germany. the shifting sands of time put us to the test, over and over again. that goes for politicians and entrepreneurs, and for central bankers, too. we heard from joachim faber just now how change is impacting on deutsche borse ’ s strategy. i would like to add my own thoughts on the strategy for monetary policy. 2 monetary policy strategy people looking to realise their full economic potential need a stable currency. that is something merchants already knew back in the middle