This is because, over the medium term, there is a strong link between the inflation rate and the rate of growth of labour costs. Given that we operate a flexible medium-term inflation target, we are generally prepared to look through year-to-year variability in the inflation rate caused by supply-side shocks or exchange rate movements.
This is because if these shocks do not flow through to a persistent change in growth of labour costs, inflation should return to a lower rate once the effect of the shock passes. But if supply-side shocks do lead to a persistent shift in labour cost growth, inflation will not return to where it was before.