Still others have suggested that the potential  BIS central bankers’ speeches  1  costs of ultra-expansionary monetary policies are likely to outweigh their benefits (Borio, 2015), particularly in cases where low inflation mostly reflects positive supply shocks.1 In principle it is true that there are times when monetary policy should simply “look through” a few consecutive observations of low, or even negative, inflation.
Reacting to the short-term vagaries of the price level can be counterproductive. However, this argument can easily lead to an underestimation of the costs and risks of deflation that arise when inflation expectations become de-anchored, when nominal rates are at their lower bound, and when debt (public and private) is high.