Pablo Hernández de Cos: The European Central Banks' monetary policy normalisation - a roadmap

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the 2022 Annual Convention held by the Asociación de Mercados Financieros, Madrid, 16 November 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen, good afternoon:

It is a pleasure for me to take part in this conference organised by the Asociación de Mercados Financieros. I have already had the honour of speaking here on several occasions in recent years, and I am delighted to be back.

Regrettably, the current economic and geopolitical setting continues to be one of unprecedented uncertainty. We now face a slowdown in global growth, but crucially, we also face much higher and more persistent inflation.

In the light of today's uncertain circumstances, the ECB has recently decided to stop providing forward guidance about the future path of its policy rates and will instead make its actions over the near term entirely "data dependent" following a "meeting-by-meeting" approach.

However, eliminating forward guidance as a policy tool does not mean that we central banks wish to give up or reduce communicating on our actions. On the contrary, in the present state of uncertainty, it is particularly important that we provide the public with insight into the analysis and rationale underlying our past and future monetary policy decisions.