Transitory factors that are not under the control of a central bank, such as sudden oil price shocks or changes in indirect taxes, may influence prices in the short term. To the extent that such factors represent one-off changes in the price level, these effects cancel out if a longer time horizon for the stabilisation of prices is chosen.
It is associated with increases in crime, profound strains on households, lower savings rates, poorer health outcomes, and diminished levels of trust in people and institutions.9 All of these forces drag down maximum economic growth and are anathema to the social progress that is part and parcel of such growth.