Our analysis showed that the persistence of low inflation across a range of statistical metrics was higher than in 2009. Inflation expectations had also become, at all horizons, less well anchored to our objective and more sensitive to that low realised inflation, whereas in 2009 they hardly moved at all.
And measures of core inflation had become less sticky, implying a higher risk that this low realised and expected inflation would become entrenched in wage setting behaviour (Chart 6). Also relevant was the fact that this loosening of inflation expectations occurred while policy rates were already at the effective lower bound.