Source: Bank of Canada  Last observation: 2022Q2  Against this backdrop, a lot of discussion involves what monetary policy should do to minimize the risk that inflation expectations will drift persistently above our target.
This is a process known as “de-anchoring,” and it can be associated with the self-fulfilling wage-price spirals that I warned against in my last speech.7 To avoid this and bring inflation sustainably back to target, some have suggested that policy-makers may need to engineer a substantial slowdown—or even a recession.