Sustained adjustment in the path of inflation to levels below, but close to 2% over the medium term still requires very favourable financing conditions, which remain predicated on a very accommodative monetary policy stance. We still need to build sufficient confidence that inflation will indeed converge to this aim over a medium-term horizon and will remain there even in less supportive monetary policy conditions.
“The Macroeconomic Effects of Non-Zero Trend Inflation.” Journal of Money, Credit and Banking 39 (7): 1821–38. Amano, R., T. Carter, and K. Moran. 2010. “Inflation and Growth: A New Keynesian Perspective.” Bank of Canada. Manuscript. Amano, R., K. Moran, S. Murchison, and A. Rennison. 2009. “Trend Inflation, Wage and Price Rigidities, and Productivity Growth.” Journal of Monetary Economics 56 (3): 353–64.