A myth that has been circulating for far too long has been that since eurozone inflation is the result of disruptions in the imported supply of commodities, manufactured goods and food, monetary policy cannot and should not do anything.
Of course, the European Central Bank (ECB) has no say in Putin's decisions to turn off the gas.
But monetary policy can at least influence imports invoiced in dollars via the exchange rate.
Due to the devaluation of the euro, the terms of trade for the euro zone have deteriorated in the recent past – with unfavorable consequences for the value of money and prosperity.
In addition, inflation can no longer be explained solely by unfavorable supply conditions.
Aggregate demand also contributes to inflation dynamics, as evidenced by the rise in service prices.
But then monetary policy has no choice but to act.
Experience teaches what was also recommended by the Bank for International Settlements these days: inflation must be combated quickly and consistently.
The longer inflation is allowed to spread, the higher the costs of fighting it.
Like the Federal Reserve in America, the ECB took a long time to accept the seriousness of the situation.
Christine Lagarde's speech in Sintra indicates that the ECB has now accepted the challenge.
But words must be followed by deeds.