Klaas Knot: Modesty in times of uncertainty - monetary policy after the crisis

Speech by Mr Klaas Knot, President of the Netherlands Bank, at the Business Economists' Annual Dinner, London, 29 November 2017.

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

Introduction

Good evening everyone. Thank you for inviting me here to share my thoughts on monetary policy. We stand at an important turning point, 10 years after the global financial crisis began to unfold. During the crisis, monetary policy stepped in with unprecedented measures. At each new turn of the crisis, we as the Eurosystem took action and designed new policy measures where necessary. These measures proved successful. Now, a broad-based economic expansion is taking hold across the euro area. As the economy is enjoying robust growth, it is giving us the opportunity to take a step back from the crisis mode.

Against this background, tonight I want to elaborate on the following. The current inflation outlook poses no threat to price stability. Despite undershooting its inflation aim in the near-term, the ECB is thereby fulfilling its mandate. This is thanks to a combination of monetary policy measures, including the Asset Purchase Programme, which has achieved what could reasonably have been expected. The slow inflation convergence towards our medium-term objective is due to global supply factors largely outside the realm of central banking.