Before doing so, let me briefly recall the circumstances in which the third European Stability Mechanism programme for Greece was negotiated, as this remains key to understanding where we are now. Against this backdrop, I will review the progress made in the third programme and discuss the way forward.
Our pattern has been to see through the first round effects of such shocks and to respond only if we think that there is a likelihood of second round effects (that is, a feed through into more generalised inflation) or if we think inflation would be permanently higher as a result of the shock. In 2013, inflation breached the target band for one quarter.