FRANKFURT, (Reuters) – European governments should have the right to spend more when inflation falls below the European Central Bank’s 2% goal. And vice versa. This was the opinion of Philip Lane, chief economist at the ECB.

European Union government are discussing how to improve the EU’s fiscal regulations to cope with an epidemic-related surge in public debt as well as the large investment necessary to combat climate change.

Lane supported proposals that give governments longer time to reduce debt and stated the new fiscal rules must also reflect the ECB’s 2% inflation target, which has been difficult for a decade prior to this fall’s sudden rise.

Lane explained that fiscal policy will be tighter when inflation runs below 2 percent but looser when it’s running higher,” Lane shared at an European Commission seminar.

Inflation in the Eurozone was 4.1% in October. Economists believe it is higher than the ECB target for next year. Higher energy costs and disruptions to supply feed into price and wage expectations.

Lane has maintained that the shock currently in effect is temporary and said that the EU’s fiscal rules can be modified to distinguish between inflation shocks caused by demand or supply. However, this would come at a cost of additional complexity.

He said that simulations of ECB staff suggested that governments could reduce their debt by 3% annually, compared to 5% at the moment. This would be a decrease from 5% and would average out over ten years instead of three.

Lane explained that adjustments requirements could be calibrated so compliance with the debt adjust path for a ten year forward-looking time period.

Reform of the EU’s Stability and Growth Pact remains in flux. Parties negotiating for a new government in Germany’s largest member are still at odds with each other.