But if instead we extend the medium-term horizon and tolerate lower inflation for a temporary period, there is no contradiction: we can “look through” the shock and wait until its effect on inflation fades out.
Crucially, however, our ability to lengthen the medium-term horizon in this way depends on our objective remaining credible – and especially when the economy is hit by repeated oneside shocks and inflation deviates from our objective systematically in the same direction for a prolonged period. In such circumstances, the inflation process can become subject to short-term spells of inertial drift 3.