Conclusion •  the Eurosystem is not only helping to create a more integrated financial market but is also contributing to greater financial stability by ensuring a strong and efficient European market infrastructure;  BIS central bankers’ speeches  3  •  Looking to the future, the Eurosystem remains committed to these objectives and will seek to exploit technological advances and innovation while maintaining safety, reliability and, ultimately, confidence and stability. 4  BIS central bankers’ speeches
On the domestic front, fast aggregate demand growth continues to be an important source of inflation risks, particularly amid increasing evidence of limits to the expansion of supply – and despite the robust behavior of fixed-capital investment. Moreover, it is clearer now that additional increases in aggregate supply depend on increases in the investment rate of the economy, a process that requires time. In this context, the Central Bank evaluates that the consistent reduction of the unbalances between the pace of expansion of supply and demand continues to be crucial in the design of monetary policy. The Brazilian Central Bank adopts a strategy aimed at avoiding inflation volatility. This approach takes into account the time lags in the transmission mechanism and has proved to be the most adequate to deal with uncertainties intrinsic in the process of monetary policy formulation and implementation. Thus the importance of developing an appropriate analytical framework for monetary policy, including forecasts and the balance of risks to inflation, as well as the preemptive stance in the decision-making process of the Monetary Policy Committee. In the current circumstances, there is a potential risk that economic agents start to attribute a higher probability that inflation increases will become persistent, a fact that would reduce the effectiveness of monetary policy. The Central Bank stresses that the performance of monetary policy tends to be more effective when the deterioration of inflation dynamics is in the early stages, rather than when it is more established.