In such a situation, it is very difficult to assess the level at which inflation will settle when the extra price increase generated by the government no longer has an effect. The various answers to this question also contribute to the division in the Monetary Council. In my opinion, when inflation expectations, i.e.
the longer-term inflation outlook, become uncertain, the central bank should act much more firmly to keep price and wage-setting behaviour disciplined. Why is price stability important now? Some think that – regardless of the answer to the question of whether the high inflation will “fall or stick” – the central bank must abandon its rigid stance and give priority to growth.