As inflation expectations incorporate the expected future path of monetary policy, and markets have priced in increasing short-term rates in the quarters ahead, the “wait and see” argument would run into inconsistencies. The current low level of inflation expectations is predominantly the successful outcome of the stabilityoriented monetary policy framework itself.
This has been inherited partly from past achievements, but these achievements have to be secured by our current and future decisions. These considerations are highly relevant in the current situation, too. Concluding remarks In general: An important way an oil price shock can lead to permanently higher inflation rates is through monetary policy accommodation.