It will be necessary to monitor the effectiveness of the measures, whose application is concentrated in the coming months. The evolution of the public finances must be carefully verified, among other things owing to the uncertain outlook for some receipts that are an integral part of the budget for 2004 adopted at the end of last year.
Downside risks largely pertain to the demand effects of the delta variant of Covid-19. Upside risks, in the short to medium term, are mainly linked to more persistent supply side bottlenecks and stronger domestic wage-price dynamics. Figure 4 shows the option-implied distribution of inflation. The darker-shaded areas show that the likelihood of deflation and low inflation outcomes has markedly declined.