Moreover, costs are pushing inflation upwards for other reasons as well, namely a shortage of manpower in certain industries, expenses to ensure compliance with additional sanitary and epidemiological rules, and possible disruptions in supplies due to the aggravation of the pandemic situation. Of course, the acceleration of current inflation itself should not significantly impact our monetary policy, but there are signs suggesting that proinflationary trends may become longer-lasting. This is evidenced by a material rise in households’ and businesses’ inflation expectations. Increased inflation expectations may induce secondary effects. This is another factor which we took into account. There are signs that secondary effects have already started to manifest themselves. What are the reasons behind them? A considerable rise in prices for individual frequently purchased products, even when it is driven by one-off factors, makes people expect an increase in prices for a broader range of goods and services. This in turn explains the readiness to pay more and pushes prices upwards. Actually, we are already observing such an environment, which once again proves that households’ inflation expectations are currently not anchored yet. When I say that they are not anchored, I do not imply the level of households’ inflation expectations, but rather their response to one-off factors. The fact that households’ inflation expectations are significantly higher than current inflation is typical not only of Russia, but of a whole range of countries (even where inflation is very low).
In an open letter published three weeks ago on climate-related financial risks from the Governor of Bank of England Mark Carney, Governor of Banque de France François Villeroy de Galhau and Chair of the Network for Greening the Financial Services Frank Elderson, the significant effects of climate change are highlighted and a call for action from central banks and supervision is issued, with specific recommendations where central banks are encouraged to integrate sustainability into their own portfolio management. In closing, the authors recognize that “climate change is a global problem, which requires global solutions, in which the whole financial sector has a crucial role to play”. Today we have unlocked the gates towards exotic, yet newsworthy debates here, in Bucharest. Therefore, permit me to extend an open invitation to you all for further discussions at the National Bank of Romania about the impact of climate changes on economies, finance and central banking. We will be honored to host such a conference in Bucharest. Thank you for your attention. 2/2  BIS central bankers' speeches