An additional piece of the puzzle in the 2021-2022 inflation upturn was the late reaction of monetary policy-makers in many countries to indications of rising inflation. As mentioned earlier, central banks in many countries, including the Riksbank, had been facing the problem of excessively low inflation for a long time.

One explanation has to do with the analysis of the economy itself, where psychological aspects, such as changes in the behaviour of households and companies caused by the major economic shocks, may have been underestimated. One example of this was the initial rise in Swedish inflation, much of which was driven by sharply rising energy prices. According to traditional monetary policy analysis, the central bank should largely ‘see through’ this, as the effects on inflation tend to be temporary. But that turned out to be wrong. At the same time as societies opened up after the pandemic, Russia’s illegal invasion of Ukraine added to already existing supply chocks and rising energy prices. In the face of these events, pricing behaviour of companies changed, and they passed on much or all of the cost increase to consumers.^[43] See National Institute of Economic Research (2023) and Sveriges Riksbank (2023b). This may have been possible because price increases were easy to accept under the prevailing conditions.^[44] This was also stated by companies in the Riksbank's own survey at the beginning of 2022. See Sveriges Riksbank (2022b). As discussed earlier, there is research showing that households find it easier to accept price increases explained by rising costs for companies than price increases resulting from high demand.

In an environment with severe global shocks, monetary policy assessment are always difficult, in part because forecasts are highly uncertain. Under such circumstances, it is important to guard against social-psychological pitfalls such as confirmation bias and group think. Confirmation bias means that individuals tend to seek information that confirms their previous hypothesis and largely dismiss information that suggests the opposite. Groupthink can be seen as confirmation bias at the collective level.^[45] See Haldane (2014). Thus, when inflation showed signs of rising, one pitfall that presented itself was the tendency to seek support for too long for the hypothesis that inflation had been low for a long time anyway and was at risk of remaining so. Sometimes, the term fear of liftoff is used to describe an inherent resistance to easing an expansionary monetary policy.^[46] See Calabria (2016) and Orphanides (2015). The possibility to enter a reservation against the majority decision is an important mechanism to foster constructive discussions in a committee. In recent years, the discussion of social-psychological aspects of monetary policy decision-making has gained a renewed momentum, partly because of the high and sharp rise in inflation.^[47] See Blanchflower and Levin (2023).