BIS central bankers’ speeches  3  partially explain why inflation expectations for the short and medium terms, as reflected in analysts’ surveys, have long remained stubbornly above the target.4 These considerations call for vigilance in monetary policy. The target is the principal guide and has not been attained. Furthermore, negative shocks could easily complicate convergence.
Risks include the following: weather and animal health problems could fuel agricultural price rises; new episodes of heightened risk aversion could trigger currency depreciation with some effects on inflation; public-sector prices could be higher than anticipated; and finally, some aggregate demand pressures may arise in light of conventional measures suggesting that slack in the economy has disappeared.