Bringing inflation under control is therefore now the number one priority. In this situation, all eyes are focused on monetary policy, and rightly so. Whilst it may not be able to lower energy prices or make food cheaper, what it most certainly can do is prevent high inflation from becoming entrenched.
Moreover, it provides a yardstick for the assessment of the effectiveness of monetary policy and for democratic accountability. However, despite the adoption of a quantitative definition of price stability to orient our policy, the ECB does not use the term “inflation targeting” to describe its own strategy – even if Alan tends to put us in the same camp.