mario draghi : hearing before the plenary of the european parliament on the occasion of the adoption of the resolution on the ecb annual report introductory statement by mr mario draghi, president of the european central bank, at a hearing before the plenary of the european parliament on the occasion of the adoption of the resolution on the ecb annual report 2011, strasbourg, 16 april 2013. * * * president, honourable members of the european parliament, i am very pleased to take part in this debate today. it forms a central part of the ecb ’ s accountability towards the european parliament to which the ecb attaches utmost importance. since 2011 the ecb has taken a number of important measures to address severe distortions in the financial markets and to address fragmentation. although i have had many occasions to discuss the ecb ’ s policies during my regular hearing before the econ committee, today is an opportunity to take a broad view on recent economic developments and monetary policy decisions, as well as to discuss the adjustment in the euro area and the outlook for emu governance. this will allow me to cover several issues highlighted in the draft resolution. 1. economic developments and monetary policy decisions following two years of recovery, the euro area moved into recession in 2012. unemployment has reached unprecedented levels, especially among young people. this economic weakness was driven by declining private consumption and faltering investment, in an environment of weak business and consumer confidence and financial market tensions. we expect a gradual recovery in euro area economic activity for the second half of this year. but this scenario is subject to downside risks. in 2012, headline hicp inflation in the euro area was 2. 5 %, reflecting elevated energy prices and increases in indirect taxes and administered prices. annual inflation rates have since declined to 1. 7 % in march this year. the governing council remains firmly committed to its price stability mandate. this is fully reflected in long - term inflation expectations which have remained firmly anchored in line with our price stability objective of below but close to 2 %. 2011 and 2012 were years in which much of our focus was on the proper transmission of our monetary policy. when changes in policy rates are not appropriately transmitted to the real economy, this is a matter of concern. in a context of large refinancing needs and persisting funding stress for banks, the ecb launched two long term ( i. e three years ) refinancing operations in late 2011 and early 2012. these operations, in combination with our

christine lagarde : building confidence in the path ahead speech by ms christine lagarde, president of the european central bank, at " the ecb and its watchers xxiv " conference, organised by the institute for monetary and financial stability, frankfurt am main, 20 march 2024. * * * since the pandemic, monetary policymakers have been facing an exceptionally complex environment. as inflation rose, we were confronted with profound uncertainty about how far it would go and how widely it would spread across the economy. and even as inflation has eased, uncertainty about its persistence has remained. the potential costs of mis - calibrating policy have been high, which is why we had to employ a policy framework that minimises the risk of mistakes. and we have done so by building our reaction function around three criteria : the inflation outlook, the dynamics of underlying inflation and the strength of monetary transmission. though we conceived these criteria when we had low visibility of future inflation, they have also helped guide our decisions as inflation has fallen and forecasts have become more accurate. as marie curie once said, to thrive through the ups and down of life, " we must have perseverance and above all confidence ". and our framework has indeed encouraged us to persevere when necessary and to build up confidence when needed. it has served as a reliable compass for calibrating policy through three phases of our current policy cycle. first, it helped create robustness during our tightening phase when we were devising how far we needed to go to rein in inflation. second, it has helped us practice patience during the holding phase until the signals from our inflation projections and underlying inflation are more consistent. third, it will support us in building up sufficient confidence to begin the dialling - back phase in which we make policy less restrictive. the tightening phase in the early phase of our tightening cycle, our main priority amid surging inflation rates was to exit our accommodative policy stance as quickly as possible. while the policy challenge was immense, the policy path was relatively simple to calibrate. but as rates rose and approached restrictive territory, calibrating our policy stance became more complex. we first had to assess how much rates needed to rise until they were sufficiently restrictive, and then for how long they needed to stay at that level. but our assessment was blurred by much lower than normal visibility of the future. 1 / 6 bis - central bankers'speeches our forecasts repeatedly underpre