But they could also exacerbate inflation if the domestic exchange rate weakens. Adding to the complexity is that monetary policy operates with long lags. If policy is tightened at a pace that does not take into account the effects of previous hikes, we risk a deeper economic downturn or financial stresses. But if policy tightening ends prematurely, we risk destabilising price expectations, entrenching inflationary pressures, and eroding central bank credibility. Of course, the question of how fast core inflation can return to central banks’ target bands is contingent not just on monetary policy. The speed of disinflation is subject to three near-term uncertainties: labour market dynamics, China’s re-opening, and a surge in food and energy prices. The first uncertainty is labour markets: continued labour market tightness could lead to persistent services inflation, especially in the advanced economies. COVID-19 presented the ultimate supply shock for labour markets across the world, as workers exited the labour force in large numbers. Even with the return of most workers post-pandemic, sectoral labour shortages remain severe in many countries, especially in contact-intensive industries such as retail trade, food, hospitality, and manufacturing. With labour markets persistently tight in most advanced economies, nominal wage growth has been robust. There are three possibly structural factors driving tight labour markets and wage pressures. First, workers have been moving away from low-wage services jobs and moving up the occupational ladder, generating worker shortages in these services jobs.
So the message is: consumers of financial services have to be responsible for the decisions they make and the consequences of such decisions. Think twice before you sign on the dotted line. Conclusion To conclude, the key takeaways are: •  banks must treat customers fairly by looking after their interests and not treating them just as target of sales; and  •  bank customers must learn to become “smart” as well as “responsible” consumers of financial services. Then how do we go about in achieving these two objectives? For banks, the HKMA will ensure that there is a set of robust but fair rules governing banking conduct. We will enforce these rules vigorously through on-site examinations and off-site surveillance. We will investigate and, if appropriate, take enforcement action against breaches when they are reported by customers or detected by the HKMA. But we appreciate no external forces can be as effective as internal controls and culture in guarding against breaches. We therefore consider it important for the boards and senior management of banks to share and cherish the same value as we do in terms of treating customers fairly.