per cent in 2020, rose to 3 per cent in 2021 and then accelerated again in the first half of 2022 to 7. 5 per cent [ figure 2 ]. today, it is close to 10 per cent. from a qualitative point of view, figure 2 suggests that there is a correlation between the divisia m331 monetary aggregate and inflation, with the former preceding the latter ; however, this correlation is uneven and has broad variations, and it is not obvious how these variations should be treated analytically in this context. to provide some exploratory evidence, the colleagues who helped me prepare these notes have plotted a pair of correlograms in figure 3 showing the co - movement of inflation and growth in the divisia m3 monetary aggregate for two different sub - periods. they confirm both the existence of a correlation a substantial part of the asset purchases under the app and the pepp did not directly involve the portfolios of households and firms, and a large part of the increase in reserves is linked to refinancing operations, specifically t - ltros. divisia monetary aggregates combine monetary sub - components based on their transaction services. specifically, sub - components are weighted by their yields, which are ‘ inverse ’ indicators of the transaction service. the difference between m1 and divisia m1 is normally minimal, as the m1 sub - components ’ yields are relatively low and stable. conversely, there are more obvious differences between m3 and divisia m3, especially until 2015 when the yields on the longer - lasting monetary sub - components were significantly higher. in the most recent period and its instability over time. there is no correlation between divisia m3 growth and lagged inflation in the period 2001 - 12, while the correlation is significant in the subsequent period and peaks at one year approximately. 32 when reading these data, we cannot disregard the concrete conditions under which inflation picked up, especially the post - pandemic bottlenecks and above all the violent shock of the war and the soaring energy prices. these data are therefore not to be taken as evidence of causal relationships. movements in variables, especially in the most recent period, have been unusually sudden and affected by exceptional factors. the lags hypothesised by monetary policy are, as we know, long and variable, and there are countless omitted variables. of this evidence, we can only say with certainty that, rightly or wrongly, it has been used very little in more recent times. i am

is a subject for debate, 16 yet it set a fundamental precedent, above all because of the firm way in which it was conducted. as a matter of fact, the fed was not the first central bank to make such a move. as early as 1974, the bundesbank had adopted a resolute approach to the fight against inflation, implementing a monetary policy based on controlling the quantity of money and communicating the target in order to steer expectations. 17 the evolution of monetary policy was mirrored by an evolution in academic thinking, for which the two fundamental references were the articles by kydland and prescott and by barro and gordon. 18 the problem was defining optimal monetary policy principles in a pure fiat regime. under certain circumstances, the action of a central bank may be vulnerable to dynamic inconsistency, thus distorting inflation upwards. the literature provides a variety of solutions ranging from strict rules for money supply growth to the introduction of ‘ constitutional ’ constraints to specify the purposes of central bank action and protect its independence. these issues are well - known and need not be discussed here. what matters for our purposes is that money was essentially seen as the determining factor for price development, and not as being auxiliary to macroeconomic stabilisation policy. in this strand of literature, the rate of price increases, for a given level of real growth, is determined in the long term by the money growth rate ( a concept which, incidentally, ethan harris, in the reconstruction of the recent history included in his work on bernanke ’ s federal reserve ( e. harris, ben bernanke ’ s fed : the federal reserve after greenspan, harvard university press, boston, ma, 2008, p. 46 ) mentions a draft law designed to force through an easing of monetary policy, a congressional resolution with the same aim, various calls by members of congress for volcker to resign, and numerous attempts by the public and by representatives of various industries to intimidate the central bank, including the farmers ’ siege of the fed ’ s main building in washington dc in 1979. the federal reserve under volcker remained steady even in this tense atmosphere ; this capacity to stand its ground set a precedent that would later be followed by greenspan during the presidency of bush senior. the peak in the annual growth rate of the consumer price index was 13. 6 per cent in june 1980 ; the index went down to 2. 9 per cent in june 1983. it rose slightly later on and then stood at