Second, the current high uncertainty about inflation dynamics and monetary policy transmission means that a multi-step adjustment path towards the terminal rate also makes it easier to undertake mid-course corrections if circumstances change.
While upside risks to inflation are currently more intense than downside risks, if the incoming data (new shocks, updates on the relative strength of opposing adjustment forces) call for a downward shift in the terminal rate, this would be easier to handle under a step-by-step approach.