It is still too early to know. We should take our time now, remain vigilant and act prudently. We need to better understand what is happening in the economy and how inflation is progressing. Then we need to be prepared to either raise rates again if necessary or to say that the tightening cycle is complete if that is appropriate.

Yes, the latest inflation data are encouraging. But we must not prematurely declare victory over inflation. We know from previous developments in history that inflation sometimes falls and then rises again. We are currently on the way to temporarily reaching 2%. But we are not interested in temporary price stability. We need to be fully sure that we are heading that way. We need more information before we can say that.

If you look at the 1970s, the policymakers back then said: "Okay, we're done with interest rate hikes." And when they said that, wage inflation started to rise again. This time is definitely different. We certainly don't want to repeat the mistake of the 1970s and declare a victory that is not yet ours. The worst thing we can do to Americans, whether it's businesses, households, consumers or community groups, is a stop-start monetary policy where we stop raising interest rates but then realise we're not done yet and have to do even more work down the road.

I don't want to take any meeting off the table because we are constantly collecting data. It's not just the published data, which is often backward-looking. We also have many discussions with companies and consumers. There is still a lot of information to come before December.

People's biggest concern is still inflation. The assessment of the economic development has changed considerably - from the expectation of a hard landing to a soft landing or even no landing at all. The fear of a recession has receded into the background. That is a good sign. People now expect us to be patient. We should neither stubbornly continue to raise interest rates without looking at the weakening of the economy, nor stop too soon and fuel inflation again.

Policy is in a very good place We have raised the key interest rate significantly. In my opinion, the risks of over- or under- under-tightening are now roughly balanced. Now it's all about risk management. I have no bias to tighten excessively at the moment. The time when we were really worried that we would lose the inflation anchor and an inflationary psychology would emerge is more or less over. We don't need an insurance mentality now, where we hedge against rising inflation. We should simply be patient and remain vigilant.

If we had increasing evidence that inflation was either picking up again or simply not falling any further, we would not hesitate to act and raise interest rates further. But that is not our base case scenario at the moment. We are not just looking at a single indicator, but at a whole range of indicators. One indicator that I look at very closely, for example, is the one that measures the frequency and magnitude of price changes by companies. I am hearing more and more often that although companies are still able to pass on rising prices, it is becoming increasingly difficult. That's a good sign for inflation. But we must continue to monitor this.

Well, that's what it is - speculation. The markets obviously have a different idea than we do of what the process of disinflation will look like. I'm not thinking about rate cuts at all right now. I'm thinking about whether we have enough tightening in the system and are sufficiently restrictive to restore price stability. Discussions about interest rate cuts are not particularly helpful at the moment. We should continue to focus on lowering inflation.

The real interest rate is very difficult to measure and real-time estimates vary almost as widely as those for the natural equilibrium interest rate. Where the real interest rate precisely is plays into my considerations as a theoretical background. But we can't base our monetary policy on such an uncertain foundation.

That is something that many people worry about and that is human. But I don't think we're seeing any evidence of that at the moment. But of course we are always vigilant. Because the aim is to bring inflation down as gently as possible. At the moment, our inflation data are improving and our real economy has not stalled. I don't see a recession on the horizon at the moment.

The inversion is no longer as pronounced as it was at the beginning of the year. And there are a few reasons why it could be different this time and the correlation is not correct. One should not be too fixated on the inverted yield curve.

I'm optimistic because the incoming information shows that employers are still hiring. And employees are still taking jobs. The labour supply in the US has increased, not decreased. Productivity is increasing. It appears that the economy has strong momentum. Consumers are still spending money. That's supporting the real economy. And all this while inflation is falling. These are many positive signals. But that's no guarantee that things will continue like this. But I am confident that we have the means, the strategies and the will to reduce inflation, and to do so as gently as possible for the economy.

In my opinion, this has a lot to do with pandemic effects. People have built up large savings during the lockdown because they haven't been able to spend their money. The labour market is also providing support. If you have a job and are being paid, if you have surplus savings and are optimistic about the economy, then you want to make up for lost time somehow. The airports, the hotels, the restaurants - everything is full. That's why there is strong momentum in the economy. The goal now is to maintain this optimism, but at the same time ensure that the economy grows at a more sustainable pace. Similar to 2019 before the pandemic. But we're not there yet. We still have a long way to go before we achieve sustainable growth and price stability.

I think the economy needs to cool down a little more. We currently have around 4 percent annualised growth. We have an additional 150,000 new jobs per month. And 100,000 would be more in line with our 2 per cent target. That doesn't mean we should necessarily continue to raise interest rates until we see these figures fall. I am saying that we need to be patient. If inflation can continue to fall without these figures deteriorating significantly, that would be good. But we can't be sure of that. Hope is not a strategy. We cannot hope that developments will be completely smooth and then make our policy on that basis.

We've defined price stability as 2% inflation on average

I often hear this from market participants, economists or in the media. But I don't hear it from companies or consumers. They know that 2.0% is just 2.0%. And they even fear that the whole equation will change if 2.0% suddenly becomes 3.0%.

We have also had structurally higher inflation in the past and have not changed our inflation target. We should be very, very careful about throwing out the inflation targets, the framework conditions and the way we approach monetary policy because the world looks different. You don't look at a world that seems to be different and say that everything has to be changed. I look at a world that seems different and say: how can I be curious about what's happening and where do I deploy my tools, my strategy, my thinking to make sure that we can do our job well?

Balance sheet normalisation is about returning to ample reserves, which will be influenced by various factors. Interest rate policy, which is our most important instrument, is about making the key interest rate sufficiently restrictive and then deciding how long the rate should be maintained. We should not confuse the two. We can continue to reduce our balance sheet even if we no longer raise the key interest rate.

That is a very big issue for us. But I don't have an answer to this question yet. We will discuss it and then set an appropriate level. The most important thing now, however, is that inflation is still too high and we need to bring it down further.