: / / www. ecb. europa. eu / press / inter / date / 2020 / html / ecb. in200124 _ 1 ~ a226a06d7a. en. html iii article 3. 3 of the treaty on the european union. iv article 127. 5 of the treaty on the functioning of the european union. v https : / / www. federalreserve. gov / newsevents / speech / powell20200827a. htm vi at the evangelische akademie tutzing, bavaria, 13 november 2010. vii https : / / www. banque - france. fr / sites / default / files / medias / documents / 2020. 05. 25 _ sep _ en _ cl. pdf viii https : / / www. banque - france. fr / sites / default / files / medias / documents / bdf - pse _ 2019 _ 09 _ 20 _ vf _ cl. pdf ix https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp200227 _ 1 ~ 5eac0ce39a. en. html x https : / / www. bankofcanada. ca / 2020 / 08 / imperative - for - public - engagement /

expectations, then wealth and income are transferred from one group to the other. the best way to be neutral is to announce a target that can efficiently guide expectations. to a non - economist, price stability would imply targeting zero inflation. however, we need to explain why targeting zero inflation is not ideal. real wage adjustments can be necessary to maintain competitiveness and sustain employment and this real adjustment is easier to achieve with a positive inflation rate. this is still more important in a monetary union in which real adjustments are necessary to maintain internal balance. the effective lower bound ( elb ) on nominal interest rates would also be reached more frequently, putting a constraint on the use of monetary policy. but i do acknowledge that using the elb argument at, say a family lunch on sunday, is easier said than done. last but not least, credibility. here, households and firms have mixed feelings : they believe that actual inflation is much higher than central banks and statistics institutes claim ; and they doubt we will deliver the “ close to 2 % ” in the future. distrust is too often the name of the game. here, let us again listen and speak. first listen to the inflation expectations of households and firms : we don ’ t measure them properly today, although they are of the essence for economic transmission of monetary policy, as households and firms are the actual priceand wage - setters. indeed, their price expectations are quite different from those of financial markets we tend to focus on. listen and then speak : once a central bank has committed to a target, it must use every tool available to deliver on it and explain clearly that the transmission of the monetary impulse to the economy entails some delays. we are all page 10 sur 10 convinced that a credible inflation objective makes stabilizing inflation easier because the objective anchors inflation expectations. let us convince our fellow citizens of our determination, “ in plain language ” – i hope my remarks today help somewhat to initiate this essential debate we will have to conduct and conclude in our ecb strategy review. thank you for your attention. references i i would particularly like to thank nathalie aufauvre, matthieu bussiere, olivier garnier, ivan odonnat and adrian penalver for their help in preparing this speech. ii https : / / www. ecb. europa. eu / press / pr / date / 2020 / html / ecb. pr200123 ~ 3b8d9fc08d. en. html https