Mr. Gabriel Makhlouf:

I am delighted to appear for the first time at this committee and I will make every effort to be more available than my predecessor.

What can we learn from other central banks? They are all having the same conversations as we are. The inflationary pressures are global because the world was essentially impacted by the pandemic. The world responded to the pandemic in similar ways. The world is now coming out of the pandemic and is seeing the same sorts of issues around supply bottlenecks, base effects and energy prices. On the other hand, there are important differences that we do need to bear in mind because sometimes it is too easy to say this central bank is doing this and to ask why are others not doing the same.

The Deputy mentioned the United States. One of the, in my view, important differences between the euro area and the United States is the US's fiscal response to the pandemic. There has been a very significant fiscal impulse that is playing a role in their current inflation numbers. Although it is fair to say that in Europe there has also been a very significant fiscal policy response, it has not on the same scale as we have seen in the United States.

Another important difference, which is perhaps a bit more technical but is worth bearing in mind, is that the Federal Reserve has got a slightly different mandate to that of the ECB. So the ECB's primary objective is price stability and it has the secondary objective to support the policies of the EU without prejudice to price stability.

The Federal Reserve's mandate is both price stability and maximum sustainable employment. The Federal Reserve has adopted a policy of average inflation targeting, which is different from the ECB's. It means that they are more tolerant of overshooting their 2% target in order to help them achieve their maximum sustainable employment objective. I mention that simply to just bring out the way the Federal Reserve responds, or will respond, to the current inflation pressures may be slightly different from the way the ECB would respond. This reflects the differences in the mandate and also the more substantive differences in the underlying dynamics.