In part, this communication strategy is anchored by our forward guidance on policy measures, so that everyone understands that the conditional future policy path supports convergence to the aim. It is also supported by demonstrating agility, with the central bank communicating that it stands ready to adjust its policy measures at any time to avoid undue delay in returning to the inflation goal and combat any adverse shock to inflation dynamics. It is also crucial to the successful anchoring of inflation expectations that the central bank shows it is a learning organisation that is committed in its search for the most effective policy tools in delivering its mandate. This general principle is especially relevant during phases when economic and financial conditions pose new challenges and require novel policy responses. 16 / 19  BIS central bankers' speeches  Whether through innovations such as the Outright Monetary Transactions programme during the sovereign debt crisis or through the package of innovative policy measures that have been launched in recent years, the ECB has shown itself to be creative and proactive in responding to new challenges. In common with other central banks, the ECB must always be open to new ideas and new methods, drawing from internal and external research and examples of best practice from around the world. Of course, not all new ideas withstand sustained scrutiny, but the exploration of new methods and formulations is essential for successful performance.
14 / 19  BIS central bankers' speeches  The medium term refers to a time span that is long enough to be consistent with a central bank’s capacity to control inflation, taking into account the typical transmission lag. The horizon should be short enough for the public to be able to assess the performance of the central bank in delivering its inflation goal. At the same time, too long a span of time obstructs accountability. However, the definition of the medium term cannot be reduced to a fixed interval: it must be interpreted as state-dependent. A demand shock that pushes inflation away from its desired level and output away from potential in the same direction calls for a policy horizon as short as the typical transmission lag: the policy response to such a shock is faster and stronger than otherwise. By contrast, if the economy is hit by persistent supply-side shocks, for example, the medium-term interval can stretch well beyond the standard transmission lag of monetary policy. Furthermore, a medium-term orientation implies that inflation can deviate from our aim in both directions, so long as the path of inflation can be expected to converge back to the objective. Maintaining a medium-term orientation is facilitated by a credible commitment to the inflation goal, such that inflation expectations remain well anchored even during a prolonged phase of inflation deviation.