Core inflation remains low, given the moderate growth in domestic costs and a cyclical recovery proceeding without any spurts. Inflation expectations over the medium term remain well-anchored. However, the appearance of inflationary tensions does require that we carefully assess the timing and methods for restoring normal monetary conditions and interest rates.
Monetary policy must prevent a deterioration of expectations, in order to keep the stimulus of international prices from passing through to domestic prices and wages in the longer-term. 2  BIS central bankers’ speeches  Real short-term interest rates that are markedly negative, as they have been over the past two years, have not improved the growth prospects of the less dynamic economies.