At the same time, driven mainly by a depreciating currency and rising wage and salary costs, the forecast inflation path has moved up, and a temporary breach of the target range is expected in the third quarter of this year, despite an absence of strong demand pressures.
Under the “representative agent” paradigm, it was assumed that microeconomic heterogeneity was not important to understanding aggregate outcomes. While this assumption enabled a convenient approximation to be made, for a couple of decades we have known that it is clearly at odds with reality.