While I don’t want to underestimate the challenge of getting that exit exactly right, I am confident that we have the ability to keep inflation from taking off. In short, we will remain vigilant. We are prepared to remove monetary stimulus when it’s no longer needed to offset the forces that currently are pulling inflation below target.
But, right now, it looks to us like it will take around two years to get inflation back up to 2 per cent. Deflation Let’s switch gears and look at the risk of outright deflation. Like out-of-control inflation, deflation can become a spiral, but a downward one.