They do not directly influence the supply side, which depends upon a whole host of structural characteristics of the economy which are largely beyond the direct reach of monetary policy. What we have to do in managing short-term interest rates is to keep overall demand growing broadly in line with the underlying - sustainable supply-side capacity of the economy as a whole to meet that demand. In other words we are trying to maintain overall, macro-economic, stability in a much broader sense, in the medium- and longer- and not just the short-term; and the Government's inflation target is the criterion against which our success, or otherwise, in achieving that broader macro-economic stability is to be measured. Our problem is that we don't know with any great precision or confidence exactly what is happening on the supply-side - that's to say precisely what rate of growth we can hope to sustain. We don't know precisely either what is currently happening, or what is likely to happen looking forward over the next couple of years or so to overall, aggregate, demand. And we don't know precisely what the full impact of a change in interest rates will be on aggregate demand, or how long it will take before the full impact is felt. Ours is not a precise science. In fact it's more of an art than a science.
8  For its part, year-on-year growth in the prices of services and non-energy processed goods, which include processed food, stood at 4.3% in May. 3  of employment.9 Among the factors behind this worse relative performance of the Spanish economy is its specialisation in tourism.10 This sector has been among the hardest hit by the pandemic and, moreover, the recovery in inbound tourism has been slower in Spain. Indeed, the gap with the euro area has tended to narrow in the most recent period, given the improvement in activity in hospitality and leisure. However, there was still a significant gap in trade, transportation and hospitality; construction; and professional and administrative activities; as well as in industry, in part due to the importance of the automotive industry. Conversely, in the sectors that have led the recovery, such as financial activities and public administration, GVA has outstripped its pre-pandemic level in Spain more than in the euro area. From the standpoint of demand components, the difference visà-vis the rest of the euro area reflects the lower buoyancy of services exports,11 residential investment12 and private consumption.13 The role of economic policy in the pandemic crisis Economic policies worldwide have played a key role to mitigate the impact of the health crisis on the income and financial position of households, firms and financial institutions. The monetary, fiscal and prudential authorities have also taken complementary measures, adapting them flexibly to the health situation and the economic effects of the pandemic.