Philip R Lane: The conduct of monetary policy
Keynote speech by Mr Philip R Lane, Member of the Executive Board of the European Central Bank, at the European Central Bank Conference on Monetary Policy 2025 "Bridging science and practice", Frankfurt am Main, 6 October 2025.
The views expressed in this speech are those of the speaker and not the view of the BIS.
My aim today is to explain the conduct of monetary policy in the euro area. I will first outline the approach to monetary policy that is embedded in our monetary policy strategy statement. Next, I will review the current inflation outlook. Finally, I will outline the considerations most relevant for our near-term policy decisions.
The monetary policy strategy of the ECB
Our recently-updated monetary policy strategy statement provides a comprehensive strategic framework for many dimensions of monetary policy. Here, I will focus on the elements that are most directly relevant for monetary policy decision making.
Paragraph five of our monetary policy strategy statement states:
The Governing Council considers that price stability is best maintained by aiming for two per cent inflation over the medium term. The Governing Council's commitment to this target is symmetric. Symmetry means that the Governing Council considers negative and positive deviations from this target as equally undesirable. The two per cent inflation target provides a clear anchor for inflation expectations, which is essential for maintaining price stability.