steer our monetary policy. and it is symmetric because both negative and positive deviations of inflation from the target are equally undesirable. we are convinced that this new formulation will avoid misperceptions about our reaction function when medium - term inflation is above or below the target and that it will better anchor inflation expectations. the second important change is the recognition that, to maintain symmetry, the governing council needs to take into account the implications of the effective lower bound on nominal interest rates. in proximity to the lower bound, an especially forceful or persistent monetary policy response will be required. 1 / 4 bis central bankers'speeches in july we also revised our forward guidance on interest rates to bring it into line with the new strategic framework. the new formulation stipulates that the governing council will not consider raising rates unless three conditions have been met : first, we need to see inflation reaching two per cent well ahead of the end of the projection horizon ; second, after convergence, inflation should be seen to be stabilising durably at the target through the end of the projection horizon ; and third, realised progress in underlying inflation should, in our judgement, be sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. achieving these conditions may imply a transitory period in which inflation is moderately above our target. against the background of our new strategy, let me now focus on recent economic developments. in summary, it is evident that the economic recovery in the euro area is increasingly advanced. this is partly due to successful vaccination campaigns across europe, which have prompted the easing of restrictions. this, in turn, has supported the rebound in economic activity, particularly in the services sector, which was hardest hit by the containment measures. consequently, the euro area economy rebounded by 2. 2 per cent in the second quarter of the year, which was more than had been anticipated. we expect continued strong growth in the second half of 2021, enabling euro area output to exceed its pre - pandemic level by the end of the year. this positive short - term outlook is reflected in the september ecb staff projections, which foresee annual real gdp growth at 5. 0 per cent in 2021, 4. 6 per cent in 2022 and 2. 1 per cent in 2023. the growth outlook continues to be uncertain and heavily dependent on the evolution of the pandemic, but risks to growth are broadly balanced. turning to inflation developments, which you

christine lagarde : hearing at the committee on economic and monetary affairs of the european parliament introductory statement ( via videoconference ) by ms christine lagarde, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, frankfurt am main, 18 march 2021. * * * madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, it is a pleasure to be with you again today for the third regular hearing of the year. in my confirmatory hearing before this committee back in september 2019, i set out a goal : to ensure that the ecb engaged in a reflection on whether its monetary policy framework was sufficiently robust to meet future challenges. 1 with the successful conclusion of our strategy review in july, 2 i believe we have achieved that goal. the review took the ecb ’ s mandate and primary objective of price stability, which is conferred by the treaty, as a given. at the same time, we thoroughly looked at key aspects of citizens ’ lives. we have recommended a roadmap to include the costs of owner - occupied housing in the harmonised index of consumer prices to better represent the inflation rate that is relevant for households. we have also developed a climate - related action plan to address the profound implications of climate change for price stability. finally, we have modernised our external communication to make it more understandable to all citizens. the review has been an 18 - month - long journey involving an immense collective effort by staff across the eurosystem, and i am particularly happy that this work has now been published in 18 occasional papers which were made available to the public on our website last week. 3 i would also like to reiterate my gratitude to this committee for the important input it provided during the strategy review process. in my remarks today, i will outline some of the key elements of our new strategy and provide an update on the outlook for the economy and for inflation, together with some reflections on our current monetary policy stance. then, at the explicit request of this committee, i will discuss the topic of financial dominance. the ecb ’ s new monetary policy strategy in practice starting with our price stability objective, the new strategy incorporates two key innovations. first, we have adopted what i would call a simple and clear symmetric inflation target of two per cent over the medium term. it is simple, easy to communicate and clear because it gives a welldefined yardstick to help us