and obfuscation. once the public recognises the incentives that motivate the monetary authority, they will adjust their expectations accordingly and unexpected monetary impulses will bear no lasting effects. in the long run, output will return to its natural level and the economy will suffer from a permanently higher inflation. the recognition of the time consistency problem spelled the demise of activist monetary policies subordinated to short - term objectives. at the same time, it lifted one necessary condition for considering secrecy the defining and somehow indispensable style of central bankers. the drive toward independence provided an additional, positive encouragement for openness and transparency. in the quarter of a century since the start of the time inconsistency literature an overwhelming majority of central banks across the globe have been made independent. the political and functional independence of central banks – now made immune from political influence – has been an important milestone in the way towards separating the authority to tax and spend from the power to control credit conditions. this separation has been the critical factor behind the general decline in trend inflation that we have observed over the past decades. 5 at the same time, the separation has imposed transparency and frequent communications on the side of the monetary authority as a manifestation of democratic accountability. see cukierman, a. and a. meltzer ( 1986 ),'a theory of ambiguity, credibility and inflation under discrection and asymmetric information ', econometrica 54 : 1099 - 128. see kydland, f. and e. prescott ( 1977 ),'rules rather than discretion : the inconsistency of optimal plans ', journal of political economy 85, 473 - 90, and barro, r. and d. gordon ( 1983 ) ‘ a positive theory of monetary policy in a natural rate model, ’ journal of political economy 91, 589 - 510. see, for example, alesina, a. and l. summers ( 1993 ),'central bank independence and macroeconomic performance : some comparative evidence ', journal of money, credit and banking, vol. 25, no. 2, may. as monetary policy has raised in stature vis - a - vis the fiscal authority – from the ancillary role to which it was relegated in earlier days – its obligations of democratic reporting have also increased. but many central banks have gone well beyond strict legal requirements with respect to both their communication and transparency duties. why? communication about the objective and strategy transparency is not only the price monetary

christine lagarde : introductory statement - european parliament plenary debate on the ecb annual report introductory statement by ms christine lagarde, president of the european central bank, at the plenary session of the european parliament, strasbourg, 14 february 2022. * * * today ’ s debate is an important pillar of the ecb ’ s accountability relationship with this parliament. it is crucial for the ecb to explain its actions to the public, and to you as their elected representatives. but, as i have said before, we need to be equally focused on listening. it is in this spirit that i have read your report and i look forward to hearing your views during today ’ s debate. i will first outline our view of the current economic situation in the euro area and explain our monetary policy stance. i had the opportunity to discuss these issues last week in the context of the regular dialogue with the committee on economic and monetary affairs ( econ ). i will then briefly discuss how the ecb ’ s new strategy addresses some of the key points described in your report, and ensures that our monetary policy strategy is fit for purpose, both today and in the future. the euro area economy and the ecb ’ s monetary policy recent data confirm that quarterly growth slowed to 0. 3 per cent in the final quarter of 2021, which still allowed gross domestic product ( gdp ) to recover to its pre - pandemic level. the moderation in growth momentum has resulted mainly from the rapid spread of the omicron variant. the associated containment measures have dampened activity, particularly in consumer services such as travel, tourism, hospitality and entertainment. the current pandemic wave and associated restrictions are likely to continue to have a negative impact on growth at the start of this year. two other factors, namely supply bottlenecks and high energy costs, are also expected to dampen economic activity in the near term. however, the economic impact of the current pandemic wave appears to be less damaging to activity than previous ones. moreover, the aforementioned bottlenecks will still persist for some time, but there are signs that they may be starting to ease. this will allow the economy to pick up strongly again later this year. inflation has risen sharply in recent months and it further surprised on the upside in january, with the rate increasing to 5. 1 per cent from 5. 0 per cent in december. inflation is likely to remain high in the near term. energy prices – as you also