Similarly, adverse wage-price dynamics would become a serious concern, if wage earners assume that current high inflation will persist. Obviously, the central bank’s task is to dampen excessively high inflation expectations if such scenario were to seem probable. So, what do we know of how agents form their expectations?
We need to lift our potential growth. Fortunately, we have the base of macroeconomic resilience and the private-sector balance sheet strength, and with the right reforms, we really could have balanced and sustainable growth again. Thank you. Page - 8 - of 8