But the variable component of our guidance demands that we: (i) regularly re-assess the medium-term price stability outlook, (ii) run this assessment through our reaction function, and (iii) decide whether or not our policy expectations on the horizon and pace of our asset purchase programmes, on the level of our policy rates (“present or lower”) and on their expected endurance (“well past …”) need adjustment.
Should we conclude that an adjustment is needed, we should not hesitate to adapt our communication. After all, abandoning the intimate link between our policy expectations and our assessment of the progress towards a sustained adjustment in the path of inflation would risk creating the false impression that we had changed our reaction function – a dangerous path towards time-inconsistency.