The Role of Central Banks in the Economy

Central banks obviously have a huge effect on the market, but they also listen very hard to the market. There are times when markets are definitely leading and that's been happening in the last two or three years. But there are other instances where ... the market gets ahead of itself and kind of forgets the reaction function of the central bank. And it strikes me at the moment that the reactionfunction of central banks is pretty simple. It's about inflation, period.