Discretionary fiscal spending is hard to predict accurately, and the measures could be adjusted to avoid inefficient interactions with monetary policy. Indeed, some governments have announced that they may reduce spending on energy price brakes or move to more targeted income-based measures. Moreover, falling energy prices are likely to imply that energy support measures will be less extensive than foreseen in the December projections.
This is also contributing to the rebalancing of risks to inflation. Wage developments Another factor that drove up our projections was wage growth. As workers sought compensation for high inflation, we expected wages to accelerate.