commentators in recent months. no : raising bank rate will not directly dampen global inflation. but it can ensure that it does not lead to high and persistent domestic inflation. the second upside risk to inflation that i would highlight is if the prolonged period of above target inflation erodes the public ’ s confidence that the mpc will keep inflation close to target. inflation has been above target for 49 out of the past 60 months. over that 5 year period, inflation has averaged 2. 8 %. inflation is likely to remain above target for the next year or so. this suggests that by mid 2012, inflation is likely to have been above target for the best part of six and a half years. yes, it is perfectly possible to explain why inflation has been so high for so long. and yes, there are good reasons why monetary policy did not try to keep inflation closer to target during this period. but just like the judge looking down on me earlier, to some people, at some point, this may just start to sound like a series of excuses. this risk is heightened by the fact that the mpc has consistently under - predicted inflation during this period. it is much easier to be wise after the event. for many people, the one thing about inflation they know with certainty is by how much their cost of living has increased in recent years. and if they take any signal from that about the path of future inflation, this could have significant implications. discussions of mpc credibility are often framed in terms of a set of binary arguments. has the mpc lost its credibility or not? are inflation expectations anchored or de - anchored? this approach encourages a focus on measures of medium - term inflation expectations. the rate of inflation expected over the next year or so may consistently move around since the mpc does not attempt to bring inflation back to target over very short time horizons. but this in the extreme, the law of one price ( loop ) suggests that, in the absence of transport costs and trade barriers, the price of a given commodity will be the same all over the world. even though the loop is unlikely to hold perfectly, the mechanisms underpinning loop might cause a sterling depreciation to lead to an increase in the prices of some domestically produced goods and services. bis central bankers ’ speeches line of argument suggests that the stability of inflation expected 5 or 10 years ahead provides a good metric for judging the credibility of monetary policy. the evidence on medium and long - term measures of inflation expectations

andreas ittner : accounting is all about trust speech given by mr andreas ittner, vice governor of the central bank of the republic of austria, at the fifth ecb conference on accounting, financial reporting and corporate governance for central banks, frankfurt am main, 21 june 2016. * * * ladies and gentlemen, at a dinner party one should eat wisely but not too well, and talk well but not too wisely. bearing these words of william somerset maugham in mind, i will do my best to neither bore you with technical stuff, nor to spoil your appetite with too wise remarks. but if i may just stay with that quote for a moment : shakespeare lovers among you may have recognized that it is a paraphrase of a speech by othello, in which he describes himself as “ one that lov ’ d not wisely but too well ”. his tragedy is that he allows his reading of reality to be coloured by jealousy ( and iago ’ s deceit ), which destroys his trust in his wife ’ s love and fidelity. i hope you won ’ t find it too heroic a leap from here to the observation that the financial markets in which central banks, commercial banks and other players operate are crucially dependent on trust. trust in the basic integrity of the institutions and corporations that make up the market, in the rules by which they play, and in the information that they disclose to the market. 1. central banks so let me start with some thoughts about the evolution of central banking and the importance of financial reporting in this process. central banks have always been confronted with changing in economic and legal conditions in their activity. these changes are often the result of crisis and the danger of financial and economic collapse. permit me, in its 200th anniversary year, to cite the example of the austrian central bank, one of the oldest central banks in europe, which was created in a crisis situation after the long years of the napoleonic wars to stabilize the troubled economic and financial situation of the austrian empire, and in particular to restore trust in the national currency. public trust in the national currency was the starting point for the need to publish financial statements of the austrian central bank. our bank was founded after the napoleonic wars and the congress of vienna in june 1816, as a better trusted agent and intermediate with commercial banks after the austrian - empire had issued paper money on a grand scale. the first monthly financial statements were published in 1848 ( so called revolution year in austria and much of