| Dealing with uncertainty is the daily bread of central bankers and has been a central theme for the ECB since its inception. Central banks like other economic operators are continuously confronted with conflicting data as well as competing and evolving interpretations of the working of the economy. In an ever-changing economic environment central banks cannot afford to commit to a mechanical "rule for action" but only set out a "framework for analysis" guiding monetary policy in the pursuit of its mandate. The ECB's two-pillar strategy epitomises the quest for a robust basis for monetary policy in a world of uncertainty. Under conditions of incomplete and uncertain knowledge monetary policy must focus on providing a firm anchor for expectations over the medium term. Being clear about what monetary policy can do and what it cannot achieve is key for credibility, for successful communication with the markets and for winning the trust of the wider public. |
Abstract |
