Dr. Mark Cassidy:

In fact, that is one of the ways inflation can take hold. When inflation gets very high, the pricing power of firms can increase, and the capacity of firms to pass on higher prices and to increase prices further becomes all the greater. That is one of the reasons it is so important to prevent inflation getting out of hand in the first place because it can lead to that unfavourable dynamic of increased pricing power for firms and inflation getting higher and higher. It is not that the ECB has specific powers to prevent any firms from increasing prices, but by keeping overall inflation at modest levels it reduces the risk of what the Deputy described. In any country, if there are any issues around competition or pricing powers within an individual market, there will be other authorities to deal with it. That is not the role of the Central Bank.