monetary policy is “ medium - term ” oriented. what exactly are the implications of the medium - term orientation of the eurosystem ’ s monetary policy strategy? the first is that the single monetary policy does not have a fixed horizon, defined once and for all ex ante, but aims, as far as possible, to take account of the “ long and variable lags of monetary policy ” dear to milton friedman. taking account of this uncertainty is particularly important in the case of the euro area, whose “ deep structural parameters ” are somewhat uncertain to the extent that the inception of the euro may have been associated with a “ regime shift ”. more prosaically, this medium - term orientation of the single monetary policy recognises that it is impossible for a central bank to control price developments with accuracy over the short - term. the second implication is that the relevant indicators for monetary policy must reflect, almost exhaustively, the main sources of both short and long - term inflation. in the light of this, the monetary policy strategy seeks, as far as possible, to rely on a “ full information approach ”. this is what the concepts economic analysis and monetary analysis – also known as the two - pillar approach – used notably at the press conferences given by the ecb president following monetary policy decisions, reflect : - the economic analysis examines cyclical, economic and financial indicators related to the main determinants of short - term inflation ; - the monetary analysis, is based on a monetary explanation of long - term inflation. it is signalled by the announcement of a reference value, which is not a committing target, of 4½ % for the annual growth of the broad money aggregate. - the medium - term orientation of the single monetary policy makes necessary the cross - checking of these two complementary approaches. from this point of view, the ecb ’ s monetary policy strategy is more comprehensive than pure inflation or monetary targeting strategies. external observers sometimes criticise the complexity of the eurosystem ’ s monetary policy strategy and argue in particular that the monetary pillar or analysis does not provide any useful information for our monetary policy decision. it is considered by some as superfluous, confusing if not as an obstacle to transparency. to give money an important role in its monetary policy analysis and strategy is however quite a natural thing for a central bank geared towards price stability to do, as inflation is “ ultimately always and everywhere a monetary phenomenon ”, to quote again milton friedman. it is worth mentioning that, in

christian noyer : inflation, europe ’ s response to the debt crisis, emerging - market economies and priorities for the g - 20 – interview in the wall street journal interview with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, in the wall street journal, paris, conducted by mr brian blackstone and ms nathalie boschat on 24 january 2011 and published on 26 january 2011. * * * wsj : the european central bank recently toughened its stance on inflation. how concerned are you about the risks of inflation taking hold in the euro zone? noyer : the uptick in inflation is mostly due to the rise in oil and commodity prices. core inflation has remained relatively subdued. by nature, that [ the rise in inflation ] should be temporary. our projections show that the inflation rate should come back to a zone perfectly in line with our definition of price stability during the course of 2011. as a central bank, we are very attentive to the only risks that exist in such a situation, which is that there might be second - round effects – an acceleration of inflation due to other causes – wages and other dynamics of internal costs. this is why we are vigilant about all those evolutions. i am quite confident that we will be able to keep inflation at bay. that includes sending the message that we will never tolerate that inflation could become entrenched. we are determined not to let inflation become entrenched through second - round effects. it is this determination that would permit us to keep expectations where they are. wsj : since the current rise in inflation is due in large part to the buoyancy of emerging countries, are you worried that controlling inflation is to some extent out of your control? noyer : it ’ s true that there are factors beyond our direct control. but there are also structural answers to these factors, such as development of production, in order to limit the rise in agricultural prices. there are possibilities, and the level of prices helps a lot to develop production and alleviate the pressure. when we look at the global picture of economy, there are emerging countries which have suffered less from the economic crisis and advanced economies which had to recover from a much lower growth and even recession. that in turn creates problems for emerging economies, including the fact that some of them have hesitated to run the fiscal and monetary policy that would have been absolutely appropriate given the state of their