PRESS CONFERENCE

Christine Lagarde, President of the ECB,
Luis de Guindos, Vice-President of the ECB

Frankfurt am Main, 8 July 2021

Jump to the transcript of the questions and answers

The Vice-President and I are very pleased to welcome you to our special press conference. Yesterday the Governing Council unanimously approved the ECB’s new monetary policy strategy. This brings to a successful conclusion the strategic review that we have been conducting over the last 18 months, drawing on an immense collective effort by staff at the ECB and the national central banks of the euro area. We have worked within the existing Treaty and taken the ECB’s primary mandate of price stability as a given. The review has allowed us to challenge our thinking, engage with numerous stakeholders, reflect, discuss and reach common ground on how to adapt our strategy. The new strategy is reflected in the document entitled “The ECB’s monetary policy strategy statement” that was published earlier today. It is a strong foundation that will guide us in the conduct of monetary policy in the years to come. Let me explain the key elements of our new strategy in more detail.

To improve the clarity of our price stability objective, and with the aim of better anchoring inflation expectations, we have decided to amend our formulation of the objective. The Governing Council considers that price stability is best maintained by aiming for a two per cent inflation target over the medium term. A two per cent inflation target is consistent with standard definitions of price stability and provides a safety margin to protect the effectiveness of monetary policy in responding to disinflationary shocks and to guard against the risk of deflation. This specific quantitative target is clear and easy to communicate, and provides a strong anchor for inflation expectations, which is essential to maintain price stability. It replaces the previous double-key formulation of below, but close to, two per cent, which was widely seen as too elaborate and occasionally giving rise to misperceptions about the Governing Council’s aspirations. The new formulation removes any possible ambiguity and resolutely conveys that two per cent is not a ceiling. The Governing Council’s commitment to the two per cent target is symmetric. Symmetry means that the Governing Council considers negative and positive deviations of inflation from the target to be equally undesirable.

To maintain the symmetry of its inflation target, the Governing Council recognises the importance of taking into account the implications of the effective lower bound on nominal interest rates. In particular, when nominal interest rates tend to be low throughout the business cycle, like at present, the economy operates not too far from the lower bound. Episodes in which the policy rate is constrained at the lower bound are often associated with disinflationary pressure. Addressing this requires especially forceful or persistent monetary policy measures to avoid negative deviations from the inflation target becoming entrenched. In these conditions, in the face of large adverse shocks, the ECB’s policy response will, as appropriate and grounded in a careful proportionality analysis, include especially forceful monetary policy measures. In addition, closer to the effective lower bound, it may also call for a more persistent use of its monetary policy instruments. This may also imply a transitory period in which inflation is moderately above target.

The Governing Council judged that the Harmonised Index of Consumer Prices (HICP) remains the appropriate price measure for assessing the achievement of our price stability objective. At the same time, we have heard the calls of European citizens for a broader coverage of housing costs in the HICP. The Governing Council has therefore recommended a roadmap for the inclusion of owner-occupied housing in the HICP, while recognising that this is a multi-year project to be led by Eurostat. During the transition period, the main reference index for monetary policy will remain the current HICP, but initial estimates of owner-occupied housing costs will play a supplementary role alongside our set of broader inflation measures and will help us assess the contribution of housing costs to inflation.

Our new strategy confirms the medium-term orientation of our monetary policy, which, since the inception of the ECB, has been an important principle of the strategy. It recognises that monetary policy cannot and should not attempt to fine-tune short-term developments in inflation. Monetary policy affects the economy with variable time lags. The medium-term orientation allows us to be forward-looking and respond flexibly to fluctuations in output and inflation. Flexibility is important, since the appropriate policy response depends on the circumstances as well as on the source, magnitude and persistence of the shocks affecting the economy. The medium-term orientation also allows us to cater for other considerations relevant to the pursuit of price stability. Employment, financial stability risks and climate change are some of the areas that we looked into in greater depth during the strategy review.

We have also carefully reviewed the appropriateness of the instruments in our monetary policy toolkit. It is clear that the set of ECB policy rates – the rate on our main refinancing operations, the deposit facility rate and the marginal lending rate – will remain our primary instrument. But, in a low interest rate environment in which the policy rates are more likely to encounter and remain constrained at the lower bound, the ECB will continue to employ other instruments when the need arises. Forward guidance, asset purchases and longer-term refinancing operations over the past decade have helped mitigate the limitations generated by the lower bound and will remain an integral part of the ECB’s toolkit, to be used as appropriate.

We have also made important changes to our analytical framework. This framework provides the foundation for our monetary policy decisions, including the regular proportionality assessment of the effectiveness, efficiency and side effects of our measures. Historically, the ECB has been known for its “two pillars”, which identified risks to price stability as originating from two distinct domains: the “economic analysis” and the “monetary analysis”. These two sources of risks were cross-checked against each other to form an overall assessment. Our new strategy acknowledges the advantages of having two specialised areas of analysis on the economy, but also recognises the value of integrating the analysis, in a world in which there are multiple feedback channels from the monetary and financial spheres to the broader economy, and vice versa. This new integrated assessment builds on the evolution that our economic and monetary analyses have undergone over time. The monetary analysis has increasingly focused on assessing the transmission of monetary policy measures, as well as the risks to price stability from financial imbalances. Meanwhile – owing to a weakening of the link between monetary aggregates and inflation – the original focus of the monetary analysis has become less important. At the same time, the global financial crisis brought to the fore the relevance of macro-financial linkages that further emphasise the need for integrated analyses.

We have acknowledged that climate change is an existential challenge for the world, and it is of strategic importance for the ECB’s mandate. The Governing Council therefore decided to account explicitly for the implications of climate change and the carbon transition in our new strategy. The Governing Council today commits to an ambitious action plan, outlined in the dedicated press release. The action plan covers several key areas. First, we will further expand our analytical capacity in macroeconomic modelling and develop statistical indicators and new tools to assess the implications of climate change for monetary policy transmission and price stability. Second, the ECB will introduce environmental sustainability disclosure requirements for eligibility for collateral and asset purchases. Third, we will adapt our risk assessment framework, our corporate sector asset purchases and the collateral framework for climate-related risks.

During our review, we also addressed the communication of our monetary policy. We heard directly how our policies affect the lives of European citizens and their desire to better understand those policies. Our last review took place well before smartphones were around, so there was a strong case for enhancing our communication with the outside world. You will notice some changes in the coming weeks relating to our regular communication. For example, a new, more narrative-based, and more concise monetary policy statement will replace the introductory statement at our monetary policy press conferences. But also, our monetary policy communication geared towards the wider public will be adapted through a more visualised and more accessible approach. And, reflecting the successful experience with the listening events, the Governing Council intends to continue to interact on a regular basis with the public via Eurosystem outreach events.

The review of our strategy that we have just completed took place 18 years after the previous one. Looking ahead, the rapidly changing world that we live in means that we cannot wait for another 18 years before undertaking the next review. A regular review cycle, with the Governing Council periodically reassessing the appropriateness of its monetary policy strategy, will ensure that the strategy remains fit for purpose. It will also further enhance the ECB’s transparency and accountability to European citizens. We intend to carry out the next assessment in 2025.

The Governing Council yesterday also endorsed a longer explanatory overview note on the ECB’s monetary policy strategy, which will be published after the press conference.

We are now ready to take your questions.

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You said you may tolerate a transitory period of moderately higher inflation when the economy is close to the lower bound. How much of an overshoot is the ECB willing to tolerate, and over what time frame?

Secondly: now that the ECB's inflation goal has been clarified, as you said, and strengthened, what is the ECB prepared to do if inflation continues to miss its goal – as it has done for much of the last decade? In your statement you suggested that many of your unconventional tools will continue to be treated as such. So, can we actually expect the ECB to be any more forceful about achieving this new aim?

Let me get back to the basics, as I call them, which are: symmetric 2%, medium-term orientation and the acknowledgement that the effective lower bound operates as a constraint. The essential feature of our strategy is our commitment to reach the target; to reach that 2%. When we say that it's a symmetric 2%, the Governing Council regards as equally undesirable deviations that are either positive or negative. Third point: we know that 2% is not going to be constantly on target. There might be some moderate temporary deviation in either direction of that 2% – and that is okay. What we are very concerned about is any sustainable, durable, significant deviation from the target – and that will require forceful reaction in both directions. The fourth item, which is going directly to your point, is that we recognise that the effective lower bound constitutes a constraint. Therefore we have to take specific action in order to simply maintain the symmetry.

In that situation, it requires an especially forceful or persistent reaction in order to avoid that negative deviation from the target risks entrenching inflation expectations. In case of an adverse shock in that situation, more forceful and especially forceful reaction will be needed. Closer to the effective lower bound, those actions might be more persistent. This may imply that for a transitory period, inflation is moderately above our target. The key commitment we have is our commitment to 2%. We respond to the effective lower bound constraint by deciding to take especially forceful or persistent action in the face of adverse shocks in order to avoid that inflation expectations be entrenched.

Turning to your second question – and I'm sure that you have read already carefully the two-page policy strategy statement, and we have a whole section in that statement about our instruments. It is not randomly that they are mentioned, interest rates, first, and the other tools that we have used with good success over the last ten years. It is very clear to all of us members of the Governing Council, that the key and first and foremost instrument that we will use, and that we use, is the ECB interest rates. The whole category of them was mentioned in my introductory remarks. We also acknowledge that in circumstances such as the one we are operating under, the other tools that we have used successfully over the last ten years are necessary tools in order to respond to the possible adverse shock that we are facing. As a result of that, those tools – by that we mean the forward guidance, the asset purchase programmes, the targeted longer-term refinancing operations - TLTRO - and the negative rates eventually – are necessary tools that will remain in the toolbox and that we will be able to continue to use if needed, in accordance with a good proportionality analysis that we would always conduct.

Can you tell me specifically how housing costs will be taken into account before HICP is fixed up? I am sure you did some ex post calculations on inflation with owner-occupied housing included. What are those numbers showing; what would inflation have been with that included?

Second question is going back to what Carolynn was asking about tolerating an overshoot; I understand that, but tolerating and targeting are two very different things. Could you just confirm that, after periods of low inflation, the ECB will not seek a higher inflation rate but merely tolerate if that happens but that's still not the target to overshoot?

On your first point: what was decided by the Governing Council was to account for the consumer cost of the owner-occupied house. So, it has nothing to do with the investment cost that an owner incurs; it has to do with the consumer cost that the owner of a house actually incurs. It is that particular portion that we want to take into account in order to respond to the frustration of many of the Europeans that we have consulted, and that reached out to us, that the cost of housing was not properly accounted for in the inflation measurements, as they saw it. If you look historically over the course of time, it is not a very significant variation from the inflation as measured by the HICP; it is quite minimal and it varies over time. There are periods of time when those consumer costs are a bit higher and there are periods when it is a bit lower. On average it's a minimal uptake from the HICP number, so that's the impact that it would have.

On your second point: let me again repeat what we have agreed and what we have committed to do. We are committed to target 2%, and we are defining very clearly what symmetry is to us; equally undesirable deviation on both sides of the target, positive or negative. We also acknowledge that, given the effective lower bound, that constitutes a constraint on us. We have to take some special action to restore the symmetry, if you will. To that end, we recognise that in case of adverse shock it will require especially forceful or persistent action on the part of the ECB. We also acknowledge that, given that especially forceful or persistent action, this may imply transitory periods in which inflation is moderately above target.

There are multiple ways to deal with the effective lower bound. This is something that many central banks around the world are facing at the moment in these circumstances of low interest rates. Our response to that effective lower bound – which we account for, which we acknowledge – is this especially forceful or persistent reaction in order to avoid that low inflation actually entrenches inflation expectations at a lower level than our target. That's our response, so let's try not to compare it with what others are doing elsewhere. There are multiple ways to deal with it; this is our way of dealing with the effective lower bound in order to restore symmetry.

I've got a very simple question really, which is: in what way does this review really change the way you will conduct monetary policy? In a way, symmetry was already in place so is it simply a clarification, in effect, of what you were already doing?

One question on climate change: when will you start buying your assets according to climate change criteria?

Let me start with your second question. If you look at the press release on climate change – if you look at the back of that press release you have a timetable. I'm very keen on that timetable, as are all members of the Governing Council. It was carefully drafted and prepared to give not only the purpose that we have, the action that we take, but also the timeline by which we deliver. So it's not words, words, words; we are facing an issue – climate change – which is the major challenge that the world is facing. We are not the primary actors; we are not driving the bus, if you will, but we are on that bus. We have to look at whether or not under our mandate it has an impact on price stability.

As I said, it's not just words, it's not a speech; it's a commitment of the entire Governing Council with delivery time, deliverables and pursuit of objectives. Let's not lose sight of that. It's a pretty strong step forward that the Eurosystem is committed to at large. We have now set up a climate change centre here at the ECB. All the committees that are working on the framework, on the operations of our monetary policy, are mobilised to do the work that is needed in order to deliver what needs to be delivered. I don't mean to go through the entire list that you have on those two pages of our timeline, but we take that very seriously – and action has already started.

On your other question, “this strategy is really not much”. I am very sorry, but I don't believe so. I think it is quite a lot. Let me mention the key changes that I see myself. We went from below, but close to, 2% to 2%. It is simple to communicate, it is solid, it is well accepted in the international economic community. It's a good balancing act between having enough room to manoeuvre in order to resist and fight disinflation and avoiding the welfare cost of having too-high inflation, 2%. Second: instead of having this, I would say, rather unnoticed-at-the-time symmetry – because that was, you are correct, mentioned in the July 2019 introductory statement of the monetary policy – we put it right in the centre of our statement. It is symmetric. We define symmetry; there is no ambiguity which was associated with the symmetry that might have been alleged to be under the two rather than on both sides of two. So it's this two, simple and solid, it is symmetric and we reaffirm that the whole Governing Council regards as undesirable deviations on both sides of symmetry, which is the perfect explanation of what we mean by symmetry.

Third, we recognise very specifically that the proximity to the effective lower bound requires, as I have said twice – but I am happy to repeat it ad nauseum, that's okay – forceful or persistent monetary policy action. We're just not saying symmetry in abstracto; we say we know that at the effective lower bound it is more complicated. There is that trap element about it and it needs to be resisted because otherwise we run the risk of having inflation expectations entrenched. That is very detrimental to price stability and the room we have to manoeuvre. Fourth: we just discussed it with the previous journalist; we want the owner-occupied housing cost to be better factored into the HICP new format, if you will. In the meantime, we will take into account existing indices that actually reflect those owner-occupied housing costs.

Fifth: climate action is squarely in the middle of our strategy as well. It's associated with the timeline that I have just mentioned. It's very important that it be, as such, squarely in the middle of our strategy and central to what we will do in terms of our monetary framework and in terms of our monetary operations. The models that some of our teams are working on at the moment will also be very innovative in that respect. Finally, but that in a way has more to do with our internal operations, but it's also critically important: that instead of having those two flow of analyses – the economic analysis and the monetary analysis – we are now clearly saying economic analysis on the one hand, monetary and financial analysis on the other hand.

We recognise that those two flows of analysis will need to be integrated because there is so much interference and interconnection between the two, as we have clearly seen since the great financial crisis. I've only mentioned the key changes that are embedded in the strategy review. I can assure you that it has been a lot of hard work amongst all of us in the last few months.

Could you just address the question – and sorry to make you repeat yourself, and hopefully we'll get a little bit further on it – I'm still not clear on whether this is a target for you to overshoot the inflation target after a long period of low interest rates, low inflation and low inflation expectations. Is that a commitment of the ECB now to overshoot the target in response to that period of, as you said, the risk of entrenched low inflationary expectations? Or is it just something that you're saying might happen as a result of your response to those conditions? I think it's important to clarify that.

Secondly: there were some expectations among analysts – and it doesn't seem to have come to fruition – that you might address questions such as the issuer limits question, so the flexibility of your Asset Purchase Programme. Can you address that, because some analysts are saying that may still be a binding constraint on your ability to act in response to low inflation? Can you talk about that, please?

On your first question: I want to repeat and reaffirm as strongly as I can that our commitment is to deliver on our target; our target is 2%. We are committed to delivering on that price stability target that we have newly defined. We recognise that there will be a constraint to that effect because of the lower bound environment in which monetary policy action is taken; as a result of which we know that to resist in the face of adverse negative shock, we will have to deploy an especially forceful or persistent reaction. What we want to do, as you very well picked up, is to avoid that the negative deviations actually entrench inflation expectations, which would indeed be detrimental to the price stability objective that we pursue. In the process of defining our commitment, this especially forceful or persistent reaction, this may well imply for a temporary period inflation that is moderately above target.

Are we doing average inflation targeting like the Fed? The answer is no, very squarely, because there are multiple ways to respond to this effective lower bound constraint. Ours is the one that I have described; which is to accept this especially forceful reaction, or persistent reaction, depending on how close we are to the lower bound. It is perfect recognition that this may imply temporary deviation, a temporary period in which inflation is moderately above our target. I cannot be clearer than that.

I have two questions myself. You said that when the economy is operating close to the lower bound on nominal interest rates it requires especially forceful or persistent monetary policy action. Can you give us an example of what is an especially forceful monetary policy action?

My second question is on the toolkit and the next Governing Council meeting. It's the first one on 22 July that will be applying the new strategy. What changes could we expect on your toolkit and moving from the old strategy to the new strategy?

I'll tell you something that will be different on 22 July, which I think is the day of our press conference. Based on what we have agreed in our strategy review, the introductory statement that I will read to you and that you will receive, will be shorter, crisper and probably more to the point and with less jargon than what you were used to. So I'm just cautioning many of you, because you might be disappointed not to see the usual series of paragraphs and be able to do the compare-line-by-line, because we are determined to improve on our communication and to make it probably more plain English, shorter and easier to understand, including by the experts that you are around this call. But that's one of the changes that we will see. In terms of toolkits, as I said, all the tools that we have been using which are listed, in paragraph eight of the statement, they're all there. They're listed in pecking order, if you will, and all those tools are in the toolkit, are in the box, and will be used as appropriate and taking into account a proportionality analysis that we conduct before we select the instruments that we want to use in order to reach our target.

To give you an example of a forceful monetary policy reaction, I would say, in my relatively limited history as President of the ECB, I would submit that the PEPP that we built and further developed in the course of 2020 was definitely a forceful reaction with a twofold approach, of course, but certainly a forceful reaction in order to maintain price stability as much as was possible under the incredible circumstances that we faced. I would also submit that we didn't do badly in that respect, and that certainly we were not at the aim of below, but close to, 2%, but certainly we did not observe a massive destabilisation of prices, but we are not where we want to be, clearly.

I have one very easy question, whether the new inflation target has put out a potential tightening of monetary policy in your view?

Then one more question on climate change policy, and what it means, in your view, for tightening of financial conditions and high inflation rates, because if you talk to corporates and business leaders they're all saying that prices are on the rise, and that enacting climate change policies will make things more expensive. So what is your view on that? Will we, by greening our economy, actually push inflation higher?

Did you say by greening the economy?

Like, by trying to or by having the carbon-neutrality goal, whether this would have an accelerating effect on prices, because things are getting more expensive.

I think the jury is out on that one. I know that there are some proponents of the view that, because of the additional regulations, because of the requirements, because of the transition cost, it will have an inflationary impact, but I think that there are others who view that, with cost of energy possibly declining, and other secondary effects of those changes, it will actually have a deflationary effect. So I think the jury is out, and certainly for the moment at least, we at the ECB have not concluded on either side of this proposition, and I think it remains to be seen what the exact impact on inflation the greening of our economy will be, but for the moment we are probably in the latter camp than the first camp.

In relation to the clarity and the solidity of our objective, I think if you were to ask those who, back in 2003 – which was 18 years ago – have indicated below, but close to, I think remembering some of the comments made by one of my predecessors, Jean-Claude Trichet, at many ECOFIN that I attended as then Finance Minister, it was pretty clear in his mind that the ideal level was much, much closer to 2%, and was probably a 1.95%, rather than these inflation expectations that we have at the moment, either market-based or survey-based, as a moment when we would begin to tighten, which I think are ill-founded, given our strategy. So I don't think that by having this simple and solid 2% we are actually pushing out the potential tightening that would take place, no.

I have two questions, if I may, related to climate change. During the review there were many organisations and citizens who voiced their concern about the ECB buying fossil-polluting assets. So could you perhaps sketch out how the asset purchases of the ECB will look after 2024, the year that is in the roadmap? Will they be greener, and in what way?

Secondly, since the ECB is a large player in financial markets, what impact do you think this new climate policy will have on the trend towards sustainability in the financial sector?

If I fast-forward into the future and I think to myself what will our portfolios look like, I would say two things: whether it is the Asset Purchase Programme, or whether it is the collaterals, I think that the disclosure will be required for any bonds, any collateral, to be eligible. So disclosure will be an absolute requirement, otherwise no eligibility. I'm in my science-fiction moment, because you're asking me to fast-forward into '24, which is even beyond our projections horizon. I would say no bonds will be eligible unless it includes all the required disclosure, and by that I mean not just those that will be prescribed by the European Union, but possibly more, because our internal rating might be even more stringent than what will be established under the CSRD and other requirements that would be imposed by the European Union. So that's number one. When I say disclosure, it might also imply elements of the transition plans that many corporates are putting together, will be putting together, and updating on a regular basis so that they are actually feasible, practical and convincing.

Second, I'm sure that by then, 2024, our excellent teams will have devised ways of making sure that we conform with the terms of the Treaty that require proper allocation of resources, and by that I mean that risks will be better taken into account in order to determine the actual value of some of those assets. So from a risk management point of view there will certainly be breakthrough changes that will have an impact on the value at which some of those bonds are in our current portfolio and would be there in four years' time, or those that would eventually be purchased then. Now, whether that is by way of tilting, whether this is by way of haircuts – I don't know. There are multiple facets to those particular solutions, but I'm sure that they will have found what is needed. What role will the ECB play in that respect? Well, I would hope that we manage our risks in a more solid way in order to conform to the Treaty, and to good management principles, and I would also assume that we play a bit of a catalyst role so that other purchasers, other investors also follow suit, as many actually have announced they will, and I hope that that will be an encouragement. I would like to mention, by the way, that we are one of the large purchasers of green bonds and have relaxed some of our requirements in terms of structure of those products in order to accept those bonds that are climate change-related in terms of structure.

So my question is, both you and Mario Draghi have signalled in the past that you would be happy with an overshoot, and yet, inflation has persistently undershot, so just the one question is why do you think people should believe you this time?

Well, I would say, first of all, because we've learned from history, and we've observed what has worked, what hasn't worked. Let me give you an example. One of our work streams – we had 13 work streams studying all aspects of monetary policy and what impacts monetary policy. One of those work streams focused on the interaction between fiscal and monetary policy, and studied not only Europe but other countries, including, for instance, Japan or the United States. It appears quite clearly from those studies that were conducted that the combination and the coordination, without much consultation actually, between fiscal policy and monetary policy can play an amplifying role or not. In other words, counter-cyclical good fiscal policies, when they take place at the same time as monetary policy can actually amplify the effects of monetary policy. I am not sure that this is something that we have observed very much until the beginning of the pandemic when we saw, effectively, a strong, robust fiscal policy also support our monetary policy and vice versa, and I think that the combination of the two showed that it was actually quite potent, as opposed to what was observed after the 2011 European sovereign debt crisis, when monetary policy was very much on its own and fiscal policy was tightening. So I think that that's one example of learning from the past that we can endorse and work with.

Second, I think the fact that the Governing Council was unanimously in support of this strategy review, unanimously concerned with delivering on the target of 2%, and totally on board with what it would imply in order to deal with the constraints of the effective lower bound, I think gives added credibility to the commitment that we have, and I was particularly pleased that after the effort that was conducted for 18 months there was this unanimous support. Finally, I would say that – and that's, again, looking into the future –the severity of the financial crisis and the incredible and tragic situation of the pandemic have been exceptional moments which have been resisted, but have not enabled us with the monetary policy that was deployed, sometime often too much in isolation from fiscal policy, to deliver on the target, on the aim that the ECB had. So let's learn from the past, stay together in this commitment to deliver on our target, and demonstrate that we mean what we say.

My question is about the timing of the decision, which kind of caught me by surprise. I mean, the decision was expected for the second half of this year. In the statement it is said that the first regular monetary policy meeting applying this new strategy would be this next meeting on 22 July, so the question is simply why was the decision so rapid and operating for that meeting? Can we expect some possible recalibration of some of the tools, and I'm not referring necessarily to the QE or the PEPP?

I would observe that we are in the second half of this year, and when something is ready, you don't want to procrastinate, sit around and continue a process that has successfully been completed. So I think it is thanks to the enormous amount of work that was produced by staff of the entire Eurosystem, with the staff of the ECB having clearly a driving seat in the exercise, but drawing on all the resources from all the national central banks, that we had this good process. My hope would have been to deliver much earlier, let's face it, but we had to suspend the process for six months. We had 13 work streams working on 13 key themes, for which you will be receiving, by the way, before the Sintra conference, a very significant amount of extremely valuable working papers that have helped us in elaborating our views in confronting our positions and in reaching agreement, but it is because of that work that we managed to advance fast enough. When something is ready, let's be out with it. Otherwise, you have the risk that you know quite well, a leak here, a leak there, and before you know it, you don't control the process any more. So I think it was actually beneficial that we could early on – everybody complains that Europe is always late. Well, the ECB is early. Good.

A couple of questions. The first one, when you read through your four main points, what you thought were the most important points to come out of the review, you put the fact that the target was now at 2% and not close to, but below, 2%. Do you not feel that this may be a communications challenge in certain areas across the euro zone that you're seen to be raising the inflation target at exactly the same time as inflation itself is rising?

Secondly, as you start to take housing costs and the cost of housing more and more into the inflation target and the decision-making process, is the Governing Council going to need greater access to macroprudential tools?

On your first point, I've partly responded earlier by telling you that the below, but close to, 2% was, effectively, very close to 2%, at least in the mind of those who invented the formula of below, but close to, 2%, at the time when the worry was excessive inflation, and not too low inflation as we have it at the moment. Are we trying to move the goalposts because there are factors that increase prices at the moment? I really don't think so, and this is certainly not the intention. I just want to remind you that the seminars and the discussions that we had about the 2% took place about 12 months ago, at a time when inflation was certainly not rising, or at a time when prices were not rising, as they are at the moment. Added to which – and that would be the second part of my response to you – is that we will see through inflation as we see it at the moment. We have good reasons to monitor carefully, to analyse very cautiously, to be vigilant about underlying inflation in particular, and to try to disentangle what is volatile, oil-related, food-related, to make sure that our assessment is valid, but at this point in time we certainly believe that this is a transitory movement that is attributable to some supply shortages, some bottlenecks, some oil-related factors, and some very specific issues relating to VAT increase, and all the rest of it. So this is clearly not a little device – no, not at all. We believe that this 2% is clearer, simpler to communicate, solid, and a good balance, added to which it gives us parity with a lot of other central banks around the world which are also operating at 2%, which is the generally-accepted definition of price stability.

On your second point, I think the reason we included the owner-occupied housing cost, and only the consumer part of that, not the investment cost – I want to be very specific on that – is really caused by the very strong feedback that we heard from the Europeans with whom we had those many outreach events, and who were vocal and loud on the fact that housing costs should be properly accounted for because they constituted a major component of their budget. So that's what has really caused our determination to include them on a temporary basis as additional component, and hopefully, if Eurostat is also in agreement with us, on a more solid and permanent basis.

This concludes today's press conference on the results of the strategy review. I would like to thank everybody for their interest. If you want to, we'll see each other back on 22 July, which will be the next regular monetary policy press conference. I hope you all stay well, safe and healthy. Have a good afternoon. Bye-bye.