On the other hand, neither can we rule out a strengthening of copper supply and demand factors that would allow prices to remain high for longer, according to some market analysts. Regarding domestic activity, we expect GDP to gradually regain faster growth. Several local factors pose risks to this projection. For now, the lack of synchrony between different expenditure components persists, with sectors (especially investment-related) that still lag behind in the recovery process. Lower than expected short-term dynamism could threaten the robustness and sustainability of the recovery of growth in the medium term. In particular, because the improvement in the consumer and business confidence indicators owes more to expectations of better conditions going forward than to the present situation, and because the financial market, within a generally favorable scenario, contains segments of greater vulnerability in consumer and commercial credit. In contrast, borrowing costs remain at record lows and international conditions have been better than we anticipated, which could add momentum to investment and speed up its recovery. In this context, the Board estimates that the risk balance for both activity and inflation is unbiased. However, it reiterates its intention to monitor any possible downward deviations of inflation in the short term that could jeopardize its convergence to the target within the forecast horizon. Accordingly, the Board reaffirms its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the two-year horizon.
Pill, H. (2022a). ‘Monetary policy with a steady hand,’ speech given at the Society of Professional Economists online conference, 9 February. Pill, H. (2022b). ‘What did the monetarists ever do for us?’ speech given at the Walter Eucken Institut / Stifung Geld und Währung conference, Inflation and Debt: Challenges for Monetary Policy after Covid-19, 24 June. Rudebusch, G. D., and J.C. Williams (2008). ‘Revealing the secrets of the temple: The value of publishing central bank interest rate projections’ in J.Y. Campbell (ed. ), Asset prices and monetary policy, University of Chicago Press, pp. 247-284. Tenreyro, S. (2022). ‘The economy and policy trade-offs,’ 2022 Dow Lecture given at the National Institute of Economic and Social Research, 23 February. 1. The title of my speech is hardly original (see Mann (2022)). Sharing this speech title with one of my MPC colleagues should reassure readers that the Committee is well-aligned in recognising its remit and mandate. 2. See Pill (2022a,b). 3. See the article on the Financial Times, 21 October 2021. 4. See Consumer price inflation, Office for National Statistics  , May 2022. 5. From today’s perspective, it is tempting to reassess policy decisions with the (considerable) benefit of hindsight. This often leads to the conclusion that policy actions should have been earlier and more aggressive. However, such assessments should recognise impossibility of acting ahead of the realisation of an unanticipated (strictly, unanticipatable) shock.