Christian Noyer: Three questions on inflation and money
Speech by Mr Christian Noyer, Governor of the Bank of France, at the European Economics and Financial Centre (EEFC), London, 11 September 2007.
What role for money in monetary policy?
"As you may know, this is precisely what is done in the context of the Eurosystem’s two-pillar monetary policy strategy which assigns an important role to money. This structure is based on a particular premise and has one important implication.
The premise is that even if money has no systematic and immediate influence on prices, it can provide valuable and specific information on future inflation, at time horizons stretching beyond those usually adopted for the construction of central bank inflation projections. Because of the long-term relation between money growth and inflation, money has leading indicator properties on future price developments..."
"...To make best use of the informational role of money, however, we have to address numerous and increasing challenges...."