percentage points. that decision, of course, was based on the most recent statistics and the indications in the bank ’ s forecast. first of all, inflation is far above target and is forecast to continue rising until early in 2012 before tapering off as the year progresses. second, available measures of inflation expectations indicate that longer - term expectations are considerably above target. these measures of inflation expectations are flawed, of course – perhaps especially so at this time. survey measures have a tendency to take excessive account of recent inflation, and bond market measures of inflation expectations are skewed by a variety of market imperfections at present. but flawed though they may be, these are the only measures we have, and it would be irresponsible simply to ignore them. third, indicators suggest that domestic demand was strong in q3 in spite of the global situation, and that the economic recovery is strong enough not to be derailed by resistance to inflationary pressures through modest rate interest hikes. fourth, we have the global situation, which is mainly a risk factor at this juncture and has not yet had a measurable impact on domestic economic developments. but we did not merely raise interest rates. we also stated that, in view of the economic situation and outlook, the current interest rate level appeared broadly appropriate for the next several months. in other words, significant new developments would be required for the mpc to raise interest rates – or lower them – at upcoming rate - setting meetings. i notice that the bond market seems to have realised the implications of this, as yields at the longer end of the market have not risen since the last interest rate announcement. but looking further ahead, it should be clear to everyone that if gdp growth forecasts materialise in coming bis central bankers ’ speeches years and the slack in the economy disappears, the monetary slack manifested in a negative real policy rate of over 1 % must be removed over time. so where do we stand with respect to the monetary policy stance? is monetary policy lax or tight? chart 3 shows the central bank ’ s real interest rate measured by the effective policy rate and twelve - month inflation. the chart shows that, in spite of two recent rate hikes, the real interest rate will be lower in q4 / 2011 ( assuming unchanged interest rates in december ) than at any time since the financial crisis struck, with the exception of q1 / 2009, when inflation soared up above 18 % and a dramatic disinflation episode was in the off

30 / 09 / 2020 introductory panel statement | deutsche bundesbank introductory panel statement speech at the institute for monetary and financial stability “ ecb and its watchers xxi conference ” 30. 09. 2020 | frankfurt am main | jens weidmann 1 introduction 2 christian noyer 3 jordi gali 4 helmut siekmann 1 introduction chere christine, good morning ladies and gentlemen, i am delighted to moderate the ﬁrst debate today. dear volker, thank you very much for your invitation and for organising this conference as a hybrid event. in times like these, we are becoming more and more experienced in communicating virtually. nevertheless, there is always a lingering sense of uncertainty about whether the technical set - up will work properly. before our single monetary policy started, there may also have been doubts about whether the eurosystem could fulﬁl its mandate to maintain price stability. looking back now – on more than 21 years of monetary policy and also “ ecb watching ” – the eurosystem has delivered on the promise made to the people of europe to keep prices stable. this has been a truly remarkable success. one key element in this has been the clarity of the mandate itself. in late 1998, the ecb ’ s ﬁrst president, wim duisenberg, outlined the strategy for the single monetary policy in a speech. he started from his conviction that, by maintaining price stability, “ monetary policy makes the https : / / www. bundesbank. de / en / press / speeches / introductory - panel - statement - 846034 1 / 5 30 / 09 / 2020 introductory panel statement | deutsche bundesbank greatest possible contribution towards raising the standard of living of europe ’ s citizens and improving growth and employment prospects ”. [ 1 ] this fundamental tenet also inspired the european treaties, which enshrine price stability as our primary objective. so to answer the question raised in the title of our session : the mandate needs no modiﬁcation when viewed from this perspective. at any rate, the eurosystem takes its mandate as a given. and our actions will continue to be geared towards achieving our overriding objective of price stability. however, the treaties are silent on how to deﬁne or measure price stability. nor do they specify a reaction function for monetary policy or a hierarchy of instruments needed to ensure price stability. nor do they tell us how to communicate with the public. choices like these constitute the monetary policy strategy. given the profound changes