That is why I will be discussing only two possible strategies for future monetary policy in Europe: monetary targeting, such as that pursued by the Deutsche Bundesbank for years already, and direct inflation targeting, the strategy applied by the Bank of England. Monetary targeting is underlain by the notion that in the medium to long term inflation is invariably caused by excessive money growth.
In this line of thinking, the central bank can attain its objective of price stability simply by keeping the expansion of the money supply under control. That does not mean to say that the central bank will focus exclusively on monetary growth. Other aggregates containing information about inflationary prospects, especially in the near future, will be monitored as well.