If people expect high inflation to continue, then it is likely to continue, with the higher inflation expectations reflected in wage settlements and firms' pricing decisions. So, it is important that people expect that the high inflation is only temporary. Currently, inflation expectations remain well anchored and aggregate wage outcomes are not inconsistent with inflation returning to target over time.
If either of those things were to change, we would face a much more difficult environment. Now, returning to the outlook for interest rates. Based on the currently available information, the Board expects that further increases will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.