00:00on the supply side oil tariffs commodity prices etc forecasters have spent more than a year now
00:09pushing back the date when inflation was supposed to peak and start falling so originally that was
00:17supposed to happen in the fourth quarter of 2025 then q1 2026 then q2 then q3 then q4
00:27and now it's sometime in 2027 that is not a comfortable pattern for for identifying what
00:36is supposed to be a temporary inflation shock now whether you attribute that to a steady stream of
00:43new supply shocks or you think the old supply shocks are just proving more persistent than we
00:50originally thought this has definitely not looked like the one and done pattern that as i said
00:58underpins the case for looking through the supply shock so i want to see actual evidence that these
01:07shocks are fading or i i find it hard to see a credible path back to two percent inflation that
01:15would justify continuing to look through them our policy response any central bank's policy response
01:24to persistent supply shocks may not be as large as i said as if the inflation is coming from demand
01:30overheating but it's unlikely to be painless and it's exactly the kind of painful trade-off between
01:38employment and inflation that stagflationary shocks always impose on the central bank unfortunately in
01:47an environment like that the only way back is the hard way so i remain somewhat optimistic that we don't
01:56have to have a persistent supply shock but it's certainly the highest danger we face
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