¶ … company predict the value and impact of inflation, in the context of other economic, social and environmental factors?

A company cannot afford to ignore the impact of inflation in regards to other economic, social and environmental factors because these factors will influence consumer's perceptions of an increase in the costs of living, which includes the prices of goods and services. If consumer confidence about the overall health of the economy is contracting, a small increase in prices may have a seismic effect, as people fear the immanent loss of their jobs, while if consumers are flushed with economic confidence, a larger increase in prices will have less of an effect. Also, fears of war, uncertainty about a change of power from one administration to the next, and changes in technology that can cut future production costs or generate new demand in other sectors of the economy will affect what consumers purchase, and when they make purchases. Finally, the Fed may raise interest rates to curtail inflation, which may make consumers more reluctant to borrow and make large purchases, regardless of consumer confidence.

Do Alan Greenspan's statements suggest monetary policy is ineffective?

Greenspan's comments hardly indicate that all monetary policies are ineffective. Witness the recent effects that the Federal Reserve's increases in the interest rate have had on the economy, and how the lowering of interest rates to historical levels in the wake of 9/11 encouraged greater borrowing on the part of consumers. However, Greenspan does believe that the Fed can neither account for, nor predict or control every dip and rise in the emotional temperature of consumers. To defuse 'bubbles' or overly exuberant and irrational consumer confidence, aggressive rather than conservative 'tweaking' in the interest rate is required and the Fed must have confidence in its perception of the needs of the economy to enact such polices.