Central bankers are constantly warning of combatting inflationary shocks before those forces become embedded in inflation expectations. 2 The Volcker disinflation of 1981–82  They draw this conclusion by replicating some of the methodology from the literature on sacrifice ratios. See, for example, Ball (1994) and Tetlow (2022) and references therein.
2 For example, Chair Powell, in testimony before the U.S. Senate, said, “We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched” (Powell, 2022a).