under the most likely scenario, we think the current policies are in good shape. alessandro marenzi : lei viene da un paese che anni fa ha avuto bisogno, l ’ irlanda, qualche anno fa ha avuto bisogno di un salvataggio. [.. ] si parla oggi molto del fondo salva stati, il meccanismo europeo di stabilita, s che va riformato e c ’ e oggi un dibattito molto forte. lo stesso governatore della banca centrale italiana ha detto : attenzione, perche se si fa questa riforma nel modo sbagliato ci sono rischi. lei condivide queste le riserve o questii dubbi, espressi anche dal governatore visco, sul nuovo ruolo che avra il mes nella riforma di cui si discute? philip lane : let me emphasise that the understanding of the reform of the esm and the very important issues about how sovereign debt will be treated, these are commonly understood. the concerns expressed by governor visco, everyone in the ecb, i think everyone across europe understands this. my assessment is : the proposed reform of the esm should not be viewed as too dramatic. remember, right now no government in europe faces a funding problem. the interest rates on all of the governments are quite low. there is no sign of any government having to go to the esm and the whole point these days of the esm is to reassure investors that if there were a problem, that we do have a european institution that will step in. i think that it ’ s a very important debate, but i think everyone should feel comfortable with the proposed reform. federico fubini : mi verrebbe da chiedere a philip lane se ritiene che il principio di un coinvolgimento del settore privato nelle perdite che si e affermato con la direttiva brrd 2 / 3 bis central bankers'speeches nelle banche, sia un principio condivisibile e da tenere a mente e anche da mettere in pratica all ’ occorrenza in anche nel caso di crisi di

near - term inflation expectations are quite elevated. in the ces, the medium - term inflation expectations of households also remain well below the near - term inflation expectations. across all available sources, macroeconomic expectations ( and prospects at the individual level ) suggest a high degree of concern about a potential economic slowdown, a general recognition that supply shocks will generate both near - term inflation surges and a decline in the economic outlook, which in turn will constrain the persistence of inflation. this profile is consistent with a profile in which market participants, experts and households broadly understand ( albeit to varying degrees ) that supply shocks and temporary factors have pushed inflation up to the current high levels but that these factors are expected to fade over time, reinforced by the understanding that monetary policy actions ( as captured by the expectations of substantial rate hikes in the coming months ) will ensure the return of inflation to target. in terms of the feedback loop from inflation expectations to nominal and real dynamics, it is important to appreciate that, for any given nominal yield curve, if high near - time inflation expectations are accompanied by expectations of a deteriorated macroeconomic outlook and significant uncertainty then the inflation cycle is less likely to be amplified through an endogenous increase in consumption, investment and credit compared to an alternative scenario in which high near - term inflation expectations are accompanied by macroeconomic optimism. put differently, cost - push inflation shocks are less likely to give rise to a pro - cyclical real interest rate channel compared to demand - driven inflation shocks. at the same time, market - based indicators of inflation risk and the right - tail of responses in the expert and household surveys also clearly show that the risk of inflation not returning to target in a timely manner is priced by market participants and feared by some survey respondents. as indicated in our recent monetary policy statements, such above - target revisions to some indicators of longer - term inflation expectations warrant close monitoring. in tracking these right - tail indicators, two conjectures are especially relevant. in one direction, more attentive traders, experts and individuals may identify more quickly a persistent shift in inflation dynamics, while inattentive participants adjust more slowly. under such scenarios, as highlighted in the pioneering work of ricardo reis, right - tail measures will be leading indicators for a generalised revision in long - term inflation expectations. [ 2 ] however, under other scenarios, the right tail might be populated by those who over - react to high spot inflation readings and mis - perceive as permanent what turns out