They also argue that monetary policy is in danger of focussing too much on borrowers and ignoring the effect that lowering interest rates could have on those reliant on interest incomes. This view acknowledges that inflation could remain at low levels for many years and that we should accept that outcome.
Elevated inflation will remain with us for some time, declining to just above target only at the end of our projection horizon. We expect that moderating energy costs, the easing of supply disruptions related to the pandemic and the normalisation of monetary policy will be conducive to inflation returning to our 2% target over the medium term.