[31] All these factors may have created perceptions of a higher tolerance for inflation and a stronger desire to stabilise output. Determined action is needed to break these perceptions. If uncertainty about our reaction function is undermining trust in our commitment to securing price stability, a cautious approach to policymaking will no longer be the appropriate course of action.
Instead, a politically independent central bank needs to put less weight on stabilising output than it would when inflation expectations are well anchored. Policymakers should also not pause at the first sign of a potential turn in inflationary pressures, such as an easing of supply chain disruptions. Rather, they need to signal their strong determination to bring inflation back to target quickly.