Dr. Mark Cassidy:

I do not think the two points are inconsistent. What Professor Lane said, and what I am saying, is that moving monetary policy now will do nothing to the current rate of inflation. It will not do it in the current timeframe. It is a supply-side problem and monetary policy is a demand problem. It will do nothing. The higher inflation is now, the more likely it is that the medium-term forecast for the ECB will be even higher. The current rate of inflation is relevant and is one of the factors the ECB looks at in making its decision. If the current rate remains high, however, and the ECB does not expect this to pass through to the longer term, then that higher rate would not by itself be enough to change. In addition to the current rate, the ECB will look at the headline rate over the medium term. It also looks at the core underlying rate over the medium term, in other words, the rate that excludes energy prices. It has set explicit conditions for all three of those. What Professor Lane said is not inconsistent with what I am saying. The ECB is looking at these three things at the same time.