Keeping a Steady Hand on the Tiller

We are in a good place, and it is no time or need for fine-tuning or overengineering.  

With inflation close to our target, economic growth weak but resilient, and our rate in the neutral territory, we are in a good position to face the challenges of the current turbulent environment. 

Incoming data broadly confirmed the narrative from our September forecast.  

At a closer inspection, the mosaic of data contains elements that should serve as a reminder of why letting one’s guard down wouldn’t be advisable at this stage.  

Core inflation has been surprising us a little bit on the upside. The data for compensation for employees came in somewhat stronger than expected.  

We have had renewed uncertainty concerning supply chain deliveries and energy prices. I would not read too much into small deviations from a desired path or start ringing the alarm bells prematurely.  

But we must recognise the presence of lingering upside risks. 

Surely, the broad trend of softening in the labour market is confirmed by several auxiliary data. With the global environment mired by conflicts and tensions, the financial markets buoyant and vulnerable at the same time, there are, of course, also significant downside risks to the economic outlook and inflation. 

From where we stand today, I see the risk as broadly balanced for both the economy and inflation. 

One thing for me is certain: in a period of such extraordinary uncertainty,  

I am convinced that we should not try to overengineer our policy and fine-tune inflation dynamics to perfection with small moves. In trying to be overly precise, the central bank could itself become a source of volatility rather than the pillar of stability our economy needs. 

Our primary duty is to provide a clear anchor, not to add to the noise. 

This is why our strategy must remain unchanged. Continuing our data-dependent, meeting-by-meeting approach is the only sensible path forward.  

For now, our baseline narrative remains intact, and we will have lots of fresh analysis available in December.  

Our job is to remain vigilant to risks of persistent deviations on both sides of our target and be prepared to respond if incoming data signal that such risks are intensifying. 

“Data-dependent” means keeping all options open. It means our next move—when it comes—could, in principle, be in either direction, depending on the signals we receive. Any automatic pilot is off the table. 

We have a steady hand on the tiller, but our eyes remain fixed firmly on the horizon.