3  4  The damage done by short-term exchange rate movements may change over time, and be regime-dependent: “It is also important for central banks to recognise that, as is the case for most economic relationships, the passthrough from exchange rate changes to prices is likely to be regime-dependent.
After a sustained period of low inflation with effective, as opposed to fictional, exchange rate flexibility, the informational content of the exchange rate in the expectationsformation process and price-setting practices of households and firms is likely to fall.