Key interest rate increases will need to continue to mitigate the risk that the persistently high inflation caused by the sequence of supply-side shocks will feed into the expectations of households and firms, thus driving price rises and leading to greater wage increases.
However, the pace at which the rates will grow and their end point cannot be predetermined on the basis of projections or pre-established scenarios, which in this phase are merely indicative. The heightened uncertainty requires a gradual approach and a careful assessment of the adequacy of the monetary stance, based on the data as they become available.