As monetary policymakers, we are primarily focused on the cyclical mattersmeaning how the pandemic and the measures taken to address it complicated accomplishing our dual-mandate objectives of maximum employment and stable prices. Making the best monetary policy decisions over the business cycle requires distinguishing between temporary effects and lasting, structural changes.
Similarly, and as I argued recently, hysteresis effects – should they materialise and the jury is still out on this – have the unfortunate consequence of locking in crisis-related income losses and may result in higher rather than lower inflationary pressures.4This is not to say that they are not a 7 / 15  BIS central bankers' speeches  source of concern, but the answer should be a structural, not a monetary one.