they are certainly the forecasts which involve the greatest interaction between ecb and ncb staff experts. the eurosystem ’ s macroeconomic forecasts are produced using a number of inputs. first, a variety of macroeconometric models of the euro area are used. employing a suite of models, each embodying a different view of the world or estimated using a different methodology, is preferable to relying solely on a single - and inevitably imperfect - framework. second, the projections produced by these models are influenced and adjusted using the technical judgement of staff experts both at the ecb and at the ncbs. introducing such adjustments is standard forecasting practice and a necessary component of an effective forecasting procedure. given this description of the eurosystem ’ s forecast process, it should be clear that forecasting is not treated as a mechanical exercise. realistic forecasts cannot be produced by the mechanical application of a single model. nor should they be. the ecb forecast is thus produced twice per year by the staff of the eurosystem and is based on the staff ’ s technical expertise. the forecast is therefore an input into the policy making process. the forecast does not embody the policy judgement of members of the governing council. when the public evaluates forecasts published by the ecb, the fact that forecasts are an input to policy making will be extremely important to keep in mind. the published forecast does not necessarily represent the opinion of members of the governing council. policy makers will always need to exercise a policy judgement in deciding how to interpret the staff forecast and the uncertainties around it. this exercise of judgement is part of what has been called the “ art of central banking ” - it is what distinguishes policy making from a purely mechanical or technical exercise. any blurring of the distinction between policy making - which is the preserve of the governing council and is ultimately captured in the final monetary policy decisions - and preparing technical analysis as input to the decision making process - which is the responsibility of central bank staff - will only serve to cause confusion. precisely because the exercise of policy judgement remains the preserve of the governing council, one should not expect policy decisions to feedback mechanically from developments in the published macroeconomic forecast. forecasts are only one - albeit important - input into the policy process. they are always evaluated in the context of other analyses and indicators. this is, by the way, true for all central banks. to my knowledge, there is no central bank in the world which bases

also at forecasts produced by other organisations as well as financial market expectations, for example as embedded in bond yields. all this information should form the basis for decisions by the governing council and allows for the best possible insight into the situation. all these remarks should make clear that the eurosystem forecast does not constitute the sole or even necessarily the main vehicle for policy decisions. on the contrary, a key feature of the eurosystem ’ s strategy is that it permits a diversified approach to the assessment of economic developments and encourages cross - checking between different forms of analysis. this robust approach is intended to help avoid major policy errors. my remarks should also have made clear that neither the eurosystem ’ s strategy as a whole, nor the second pillar within it, should be characterised as inflation targeting. more specifically, it certainly should be clear that monetary policy decisions do not feed back from deviations of the inflation forecast ( based on the assumption of unchanged policy interest rates ) from an inflation target at a specific time horizon. publication of macroeconomic forecasts would thus not change the ecb ’ s monetary policy strategy. in particular, the role of forecasts in decision making which i have described at some length will be unaffected. the ecb has adopted a new and distinct strategy which reflects the complexity of implementing monetary policy in a large and diverse single currency area consisting of soon to be twelve different sovereign nations. this complexity is compounded by the challenges posed by the novelty of the monetary policy regime, which implies that the tools and approaches used to identify risks to price stability as well as the procedures used to produce macroeconomic forecasts for the euro area need to be continuously re - evaluated and monitored closely. even less than would be possible under “ normal ” circumstances, in such an environment monetary policy cannot be reduced to reacting in a quasi - mechanical manner to monetary developments or inflation forecasts. the complexity of the environment requires a more sophisticated approach, embodied in the ecb ’ s strategy. let me finally say that i am hopeful that the publication of macroeconomic forecasts will improve the presentation and explanation of monetary policy decisions to the public. by publishing an important input into the decision making process, the considerations facing the governing council when taking a decision should become clearer to the public. however, for this to be the case, both the assumptions underlying the forecast and the role of the forecast as an input into the policy process need always to be kept in mind. 5. the communication aspect of the strategy - transparency