In particular, the Committee’s actions in 2011 suggest that it is more willing to tolerate inflation risks – and the concomitant medium-term and long-term employment losses – than it was in 2010. If this drift in inflation risk tolerance were to persist, or were expected to persist, it could give rise to a damaging increase in inflationary expectations.
In principle, one might have preferred a bolder attitude, one that addressed simultaneously and directly all the needed harmonisation in the fields, for instance, of bankruptcy laws, taxes, investor protection and market infrastructure regulations: a Thatcher-like “big bang”. But that would have been definitely unrealistic.