evidence: In addition, businesses appear to be ramping up investment, which could have positive productivity effects. Fixed capital formation grew 8.3% in the six months to March, though the year-ago growth stood at a more modest 2.6%.9 Production of capital goods, an indicator of business investment demand, dropped in May due to the flooding, but the April to May average was still up 1.8% from the previous quarter and up 10.0% from a year earlier.10 Similarly, the volume of imported capital goods was weak in May, but the April to May average shows it grew 3.6% from the previous quarter and 15.4% over the previous year.11 [...] Part of the change is that the labor market continues to tighten more than expected, which is likely inflationary. Inflation expectations, at 6.4%, for the next 12 months, are also well above the inflation target of 3%.18 For comparison, inflation expectations were below 5% at the end of 2019. However, a large concern seems to be coming from the country’s fiscal position despite the recently implemented fiscal framework. The concern is one of fiscal dominance, where rising government debt levels impede the central bank’s ability to control inflation.