Keynote speech by Philip R. Lane, Member of the Executive Board of the ECB, at the Bank of England Watchers’ Conference 2024, King’s College London

London, 25 November 2024

Introduction

My aim today is to explain how uncertainty is incorporated in the monetary policy process at the ECB.^[1][2] While monetary policy makers have always had to grapple with uncertainty, recent years have been marked by a pronounced increase in the quantum of uncertainty. This includes the uncertainties related to the pandemic and the unjustified Russian invasion of Ukraine (Chart 1). It also includes the uncertainties related to technological change, geo-economic trends and the green transition.^[3] In this speech, I will discuss how the ECB incorporates risk and uncertainty in its forecasting, in the preparation of monetary policy decisions and in communication.^[4]