Paul Tucker: Reflections on operating inflation targeting
Speech by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the
Bank of England, at the Graduate School of Business, University of Chicago, Chicago, 25 May 2006.
My thanks for comments to Peter Andrews, Alex Brazier, Roger Clews, Spencer Dale, Paul Fisher, David Walton and Anthony
Yates. For comments and background work to Damien Lynch, Richard Harrison and Tim Taylor. And for secretarial support to
Katherine Bradbrook and Michelle Wright.
* * *
Next month will be the fourth anniversary of my appointment to the Monetary Policy Committee. It is
time to draw together some of my thoughts on operating an inflation-targeting regime. Very much from
the perspective of a practitioner, but engaging with some of the academic literature on our mission
and, in particular, policy strategy.1 At the outset, I should make it absolutely clear that these are my
own personal views, and do not necessarily represent those of individual colleagues on the MPC or
those of the Committee as a whole.
Scene setting
The UK was not quite the first country to adopt inflation targeting - Canada and New Zealand got
there before us. But it has certainly taken off since our conversion, in 1992. It is now the explicit
framework of over 20 countries, including more than fifteen in the emerging market world. And the IMF
recently reported2 that another 20 have sought technical assistance on introducing it.
The spread of inflation targeting has coincided with a period - pretty well everywhere in the developed
world, except Japan - of low, stable inflation, and well-anchored inflation expectations. The Great
Moderation cannot plausibly be attributed to inflation targeting narrowly defined, because the biggest
monetary systems - the US, and the euro area - are not explicit inflation targeters. But some
commentators do attribute the Great Stability - as it gets called in the UK, since we have enjoyed
stable growth as well as low inflation - to shared ideas about the conduct of monetary policy, ideas
that are embodied in inflation targeting.
Is all this too good to be true? Are there no challenges facing us? Or have central bankers finally
cracked how to do monetary policy after around a century of managing fiat money?
A simple story of what central bankers do
As background, I am going to work within the framework of what has become the most commonplace
stylised account - ie in simple models - of what central banks do.
Society and/or central bankers are assumed to care about deviations of inflation from a target, and of
the level of output from potential, typically represented by a quadratic loss function. That is equivalent
to wanting to ensure that inflation will not on average be biased away from the target, and to avoid a
volatile inflation rate; and similarly for the 'output gap'.
Given that objective, the determinants of aggregate demand, and a short-run trade off between output
and inflation, the monetary policymaker is assumed to proceed by setting interest rates in the light of
the outlook for demand relative to supply and for inflation.
The central bank decides a nominal interest rate, which it establishes in the money markets3. As the
prices of many goods and services are sticky, this has the effect of enabling the central bank to move
around the actual short-term real rate of interest relative the 'natural' or 'neutral' real rate4 that would
prevail in the absence of those frictions.
Broadly, another consequence of prices and wages being sticky, together with some inertia in inflation,
is that when shocks hit the economy, the central bank cannot get inflation to return to target instantly.
So the central bank needs to take account of the infamous long and variable lags in the transmission
of monetary policy decisions to the things it cares about5. In other words, in today's vernacular the
central banker has to be forward looking, in particular about the outlook for inflation. That, essentially,
is why some economists refer to central banks as undertaking inflation-forecast targeting6.
Under this regime, the central bank needs to form judgments on some big things. On the current and
prospective pressure of demand on the supply (or productive) capacity of the economy; on the
implications for the outlook of any cost shocks (eg oil price rises); and on whether
medium-to-longterm expectations of inflation are well anchored to its (explicit or implicit) target.
Having done that and so formed a view on the outlook for inflation, the central bank may have to
decide how quickly to bring inflation back to target, in the light of how much weight it gives to
containing volatility in output7. It then needs to decide whether it should set policy so as to restrain or
stimulate aggregate demand, or to be neutral. And it therefore needs to judge whether the current
level of interest rates is, in fact, likely to deliver its desired degree of stimulus or restraint.
Underlying those 'big picture' judgments are, at least implicitly, views on some fundamental economic
variables. Notably, on the supply capacity of the economy and its prospective rate of growth; on the
rate of unemployment below which inflation is liable to increase; on the natural (or neutral) real interest
rate. Those judgments are, in truth, formidably difficult to make, because they need to be regularly
updated given structural change in the economy; and because each of the variables is unobservable!
Perhaps understandably, that leads some policymakers8 to the conclusion that these concepts may be
useful as just that - concepts - but not at all in practical decision taking. Whilst not wanting to deny
their unobservability, I do not take quite that view. For example, the natural real rate may be
unobservable, but there is no ducking the fact that a policymaker needs to form a view on whether its
policy stance is stimulating or restraining demand, which amounts to broadly the same thing.
Against that background, I can return to a central bank's objectives. To maintain inflation in line with a
target over the medium term. And, typically with less priority, to stabilise the path of output in the face
of cyclical shocks; in the UK Government's mandate to the Bank of England9, that is expressed in
terms of, inter alia, the MPC avoiding 'undesirable volatility in output'. I shall say something about
both, before going on to discuss some issues concerning monetary policy strategy that have featured
in recent academic commentary.
Medium-term inflation expectations, forecasts, and models: nominal stuff
In terms of the primary objective of delivering stable inflation, it has helped the UK to have a clear
target. In contrast to many inflation-targetting countries10, we have a point target: 2% on the consumer
price index. That leaves no room for debate in our (one person - one vote) committee about what the
target is. And there should be no uncertainty amongst households, firms and participants in financial
4
Wicksell, K., 1898, 'Interest and prices', London , Macmillan, 1936. Translation of 1898 edition.
5
The classic reference, in the context of the relationship between money and inflation, is Friedman M., 1961, 'The lag effect
in monetary policy,' Journal of Political Economy, vol. 69, no. 5.
6
For example, Svensson, L.E.O., 1997,'Inflation forecast targeting: Implementing and monitoring inflation targets', European
Economic Review, vol 41, issue 6.
7
See Batini N. & E. Nelson, 'Optimal horizons for inflation targeting', Journal of Economic Dynamics and Control, vol. 25,
issue 6-7.
8
A recent example in relation to r* is Weber, A.A., 2006, 'The role of interest rates in theory and practice - how useful is the
concept of the natural real rate of interest for monetary policy?', G.L.S. Shackle Memorial Lecture 2006, Cambridge.
9
'Remit for the Monetary Policy Committee', letter from Chancellor of the Exchequer, the Right Hon. Gordon Brown, to
Mervyn King, Governor of the Bank of England, on 22 March 2006. Available at
www.bankofengland.co.uk/monetarypolicy/pdf/chancellorletter060322.pdf.
10
For example Australia, Canada, New Zealand.
BIS Review 46/2006
markets about the steady-state rate of inflation being targeted. In other words, a point target makes
communication somewhat more straightforward.
Of course, that is not the same as saying that we can guarantee to deliver inflation outturns
consistently in line with the target over an economic cycle. Shocks, and even policy mistakes, will
cause inflation to deviate from target. Explaining such deviations matters.
Especially when being reappointed for a further term, MPC members are typically asked by the House
of Commons' Treasury Select Committee whether the MPC has made any big mistakes11.
In response, we often talk about luck, diligence etc. But I think that the best test - perhaps the only
important test - is whether medium-to-long-term inflation expectations have been dislodged from the
target.
In the UK, expectations have generally been in line with our target since the Bank was given
operational independence. But as the recent slight tick up in some measures illustrates, we have to be
constantly vigilant. By contrast, an uncomfortable amount of commentary - academic and in the media
- proceeds as if that particular battle is won for all time; the 'death of inflation' school of thought.
Indeed, seductively, these days 'victory' tends to be inscribed in to the economic models used by
central banks as an input to their forecasts. Reflecting the achievements of this university, our models
have a well-defined steady state equilibrium for the real economy; well-defined steady state nominal
properties, typically an inflation rate; and forward-looking rational expectations, that is to say
modelconsistent expectations. The second of these characteristics means that a nominal target is always
achieved in the medium-to-long run. And the third means that the model's agents know that; ie they
know now and behave - set wages and prices - accordingly, so that in these mainstream models the
target is achieved over cyclical frequencies too.
Typically, nominal things enter via inflation expectations, and they are pinned down in the stylised,
model economy by a policy rule of the kind I sketched earlier, expressed in terms of an official interest
rate (the price of base money). But just in case it were thought that the "problem" of models promising
the policymaker success stems from the crime of ignoring money quantities, I should make it clear that
that is not so. It would not make a fundamental difference in policymakers' modern-macro models if
nominal stuff entered via a money quantity, with the policy rule being specified as a money-supply
growth rate. So-called velocity shocks to the demand for money would cause deviations from an
inflation target in the short run, but everything would ultimately settle down nicely - because that
assumption would be built in to the model's long-run properties (in this instance via a
demand-formoney equation that was imposed as stable over the long run).
I'm exaggerating a bit. Forward-looking models can be set up in ways where things go wrong for a
while. In particular, by allowing agents to learn more or less gradually that the monetary authority
really does mean it about achieving its target for inflation (or some other nominal variable)12.
Everything still turns out okay eventually, but the route can be a bit bumpy.
Experiments of that kind can help policymakers to think through, in a disciplined way, what might
happen if inflation expectations were to become dislodged. But, so far, they do not do much to help us
know what to look for in identifying whether inflation expectations are in the process of becoming
dislodged. We do not know enough about how households and firms form their expectations - how
much forward7 looking, how much backward-looking - to be able to model the process rigorously.
That is not part of the 'information set' of policymakers in today's world.
What this underlines is that policymakers may well not be able to rely on their models to help them
terribly much when the stakes are highest; ie when our credibility may be fragile. They are tools to help
us think. But they don't tell us the answers. Crucially, we have to make judgments about whether
medium-term inflation expectations are, in fact, securely anchored. We need to resist falling into the
trap of thinking that the nominal side is now, and forever, nicely looked after by some miracle of
credibility.
Notwithstanding the extent to which analysis of real economic variables seems to dominate the pages
of most central banks' published analysis, including the Bank of England's, maintaining real aggregate
demand in line with supply is not a sufficient condition for achieving an inflation target; indeed, it would
be consistent with any level of inflation. We absolutely have to attend to indicators of medium-term
nominal trends. That is why central bankers like me look at measures of inflation expectations from as
many sources as we can: bond markets, surveys etc. And it is why the ECB and others, including at
the Bank of England, track the monetary aggregates as a cross check, a potential amber light alerting
us to medium-term risks.
Stabilisation policy and the impracticalities of fine tuning: real-side stuff
That brings me to the second element in the conduct of policy: stabilisation of the path of demand and
output, in order to keep inflation in line with the target over the cycle, to underline the commitment to
medium-term stability, and as something desirable in its own right.
Well-anchored inflation expectations do make stabilisation policy 'easier'. When a credible central
bank cuts its interest rate to offset the adverse effects of a shock to demand, it will not be perceived as
trying to raise demand and employment in the short term (say over the next year or so), at the
expense of higher inflation down the road. Rather it will be understood as trying to avoid deficient
demand: as trying to stimulate demand a bit in the short run in order to bring it back to the economy's
supply capacity and so, precisely, to maintain inflation in line with its target.
For at least this policymaker, however, there is a risk of commentators overstating our capacity to
stabilise demand - understandably perhaps following, in the UK, more than a decade of fairly steady
growth since inflation targeting was introduced.
To be clear, I do believe that we should be able to put behind us the self-inflicted economy-wide boom
and bust that, miserably, characterised the UK economy for a few decades until the early 1990s13. All
too frequently in the past, aggregate demand was allowed to get out of control, bringing with it,
variously, a credit boom, an assetprice bubble and, sooner or later, runaway wage and consumer price
inflation. Belatedly, the monetary authority would slam on the brakes, tipping the economy into
recession. Inflation would then slow.
But that we no longer neglect the inflationary consequences of excess demand does not mean we can
nicely fine tune demand to ensure uninterrupted growth. Why?
I will mention just two reasons. First, we just do not know enough about the underlying structure and
properties of the economy. Quite apart from the change in monetary regime, the extent and variety of
the structural change underway in the real economy is profound: for example, labour market reform
domestically, and the opening up of labour markets across the European continent, which has
materially increased inward migration to the UK; the new technology and the price transparency it
brings; China and India. In consequence, in the UK for the moment we do not really know whether the
short-run trade off between excess (or deficient) demand and inflation has changed; whether the
short-run Phillips curve has become flatter.
Second, the data we use give us an unavoidably imperfect read on what is going on. Not infrequently
in my experience we debate the various possible explanations for some puzzle in the data, only to find
that a year or so later the data have been revised and, as it turned out, there was no puzzle. For that
reason, the Bank of England is putting considerable resources into researching data uncertainty14.
Where does that leave us? I should like to say that we can 'rough tune' but not fine tune. Rough tuning
is important, as we do need to keep aggregate demand and supply broadly in line as a condition for
maintaining stable inflation. But that does not mean that we can always smooth out quarter-to-quarter,
or even year-to-year, fluctuations in demand and output to the extent some commentary implies. In
terms of the political economy of monetary policy making, it is important for the central banking
community to get that across and accepted. If we fail in doing so, and the public believes that central
banks can deliver more than is realistic, there will at some point down the road be disappointment,
conceivably putting in jeopardy the real achievements of monetary policy in delivering price stability.
Of course, these strictures apply most of all to ourselves. We try to discipline ourselves not to claim
too much credit for stable growth. And in forecasting, we have to attend to the uncertainties around our
projections of the central outlook. Some numbers may serve to underline that. The MPC's projections
are published as fan charts. The fan-chart standard deviation of output growth at around one year is a
little under one percentage point; and of inflation at around two years, roughly 0.5 percentage points.
This is not a world in which one should get carried away by fine judgments that alter the central
projection for demand by 0.1 or 0.2 percentage points. Yet, as the Bank has documented,15 assuming
that credibility is maintained, the effect of a surprise change in the official interest rate, is judged to be
small; maybe less than 0.1 percentage point on the annual rate of inflation two years after a 25bp
surprise change maintained for one year. Of course, we are not in fact in the business of aiming to
make surprise changes in our policy rate. Against a background of credibility, a lot of practical
monetary policy making is not about forestalling major lurches in the economy and inflation via large,
abrupt changes in the policy rate. Instead, it has to involve careful analysis of the conjuncture, with
transparency to the market. But these numbers do perhaps illustrate the importance of our not getting
drawn into absurd degrees of detail, and the risk of signalling that we think we can precisely fine tune
demand conditions.
How can we maintain and underpin credibility? The following seem to be ingredients. Being very
publicly committed to anchoring medium-term inflation expectations in line with a clear target, above
all else. Inflation outturns being, on average, in line with the target. And being seen to be committed to
the essentially technical job of professional economic analysis of conjunctural conditions and the
underlying structure of the economy. Typically moving our policy rate in steps of 25 bp seems to have
been useful in conveying the break with the past. Perhaps because it conveys that things are 'under
control'. The counterpart to that is being understood to be ready to do whatever it is necessary to
maintain well-anchored inflation expectations.
Policy strategy, risk management, and communication
If the key tasks are anchoring inflation expectations and, with less weight, stabilising demand
conditions, how do central banks go about their policy job?
At the Bank of England, in both our published projections and our policy decisions, we emphasise the
risks around the 'central outlook'. And although some of the presentation is different, that is on the
same page as what former Chairman Greenspan called the 'risk management' approach to policy.
In my experience, it is not sensible to respond to all possible risks, even some that would have a big
impact if they crystallised. Take, for example, global imbalances. If they were to unravel abruptly, with
a big fall in the dollar against the euro, aggregate demand in the euro area might fall for a while.
Depending on what had happened to sterling's bilateral exchange rates, the UK would not be immune
from spillovers, as the euro area is by far our largest trading partner. For some time, therefore, global
imbalances have been a real source of risk to the UK as well as to the global economy. Should I have
been voting to cut interest rates to head off those risks? I don't think so. It would not have made sense
to try to anticipate the effects of a shock that had not yet occurred and over which we had effectively
no influence. A number of external 'tail risks' are rather like that.
How does that fit with 'precautionary' or 'insurance' policy settings. Individual policymakers differ on
the usefulness of this concept. I find it quite useful. But on my view of what it means, it has to be
subject to some quite stringent conditions in practice.
Remembering that we have a highly imperfect line of sight of what is going on in the economy,
assume as a thought experiment that some indicators are flashing the possibility that there has been a
material shock to demand. For example, imagine that there has been a bit of bad news but that there
are signs that consumer confidence may be ebbing away by more than we would have guessed was
proportionate. So maybe spending will fall materially. The probability is thought to be low, but tangible.
In other words, most likely the outlook is fine, but it might not be. A cut in rates might be warranted in
order to guard against the consequences if the risk has, in fact, crystallised. The policymaker could
wait for more evidence, but by waiting they risk being too late to avoid some deviation of output from
'potential' and of inflation from target. This is not a free lunch. In keeping with the insurance metaphor,
a premium will have to be paid: in the form of accepting a slightly higher probability of inflation rising
above target in the near term if the (insured-against) risk has not, in fact, crystallised. In other words,
the policymaker faces a trade off, based on a judgment of probabilities and costs.
But, in my view, there is more to it than that. Communication matters too. If the policymaker takes out
the insurance, they need to be clear (with themselves) about the conditions under which it would be
withdrawn, ie the cut reversed. And that state-contingent policy analysis needs to be communicated to
the market too.
Some economists do not like the idea of 'insurance' policy settings, and ask, reasonably, how they
square with the type of objective (loss) function I set out at the beginning of my remarks. Alternatively,
it is argued that they are so obviously consistent with a 'standard' loss function that it does not really
add anything to talk about 'insurance' or 'precautionary' settings as a way of framing policy analysis
and decisions. These are both fair points! Possible responses run as follows. First, maybe we (society)
are more averse to fairly bad events than to risks that take us just a little distance from target/potential;
eg maybe preferences would be better approximated by a loss function with a 'higher power' than a
quadratic16. Second, maybe what is going on can be thought of in terms of how heavily or not we
discount future deviations from target/potential relative to very near-term deviations; ie a policymaker
may accept the price (premium) of risking slightly higher/lower inflation in the nearish term in order to
reduce (insure against) the risk of a bigger or more persistent deviation of inflation from target a little
down the road.
What the insurance/risk management metaphor does illustrate is that a policymaker has to think
beyond the immediate policy decision. Indeed, it would be odd not to. In the great scheme of things,
fixing the overnight rate for the next month (in the UK) - or 45 days or so (in the US) - seems neither
here nor there.
Of course, on both sides of the Atlantic, we have recent examples of policymakers making their
strategy clear, albeit in subtly different ways. In the most recent cycle, the Bank of England's rate
troughed at 3.5%. Some of us made it clear that, so far as our individual decisions were concerned,
we expected, other things being equal, to vote for a gradual withdrawal of monetary accommodation
if/as demand recovered and the slack in the economy was gradually absorbed.17 Crucially, those
statements were state contingent.
Some policy strategy issues
Against that background, I should like briefly to review, without reaching firm conclusions on, four
issues that feature in the recent literature. Whether central banks should publish an expected (optimal)
path for their policy rate. Second, whether stabilisation policy is subject to a bias, meaning that a
central bank will find it optimal not to deliver on promises and that, in consequence, its policies to
offset shocks will be less effective than they could be if it could commit itself. Third, whether
stabilisation policy could be more effective if the central bank targeted a path for the price level rather
than an inflation rate. And, fourth, how central banks should respond to asset price inflation.
(a) Should central banks publish an expected policy path?
Amongst others, Lars Svensson18 and Michael Woodford have argued that central banks should
publish the path they expect for the policy rate or the near-term path of inflation they are aiming for.
The Norwegian and New Zealand central banks have been publishing policyrate paths for a short
while.19 The Bank of England does not. What do I - let me stress, personally - think about that?
As others have pointed out, managing a scheme for voting by nine members on a path of rates would
be pretty complex. Proposals have been made (eg for deriving a median path from individual
members' paths)20, but they seem to entertain the possibility of shifting majorities for different parts of
the resulting path (or implied money market curve). That may add an extra complication to explaining
policy.
Indeed, more broadly, there would probably be a challenge in the area of communication. A single
path for rates would, of course, be a misleading statement of the policymaker's intentions; of its
'reaction function'. The path policy takes will depend, very obviously, on the shocks that hit the
economy in the future. But not only on that. Also on whether, even in the absence of new shocks
affecting households and firms, the economy evolves on the path the central bank expected, including
agents' responses to past policy decisions and shocks. On any changes in view about how the
economy works (about the 'model'). And it will depend on whether the central bank's beliefs about
agents' inflation expectations are (broadly) accurate. In other words, the outlook for policy is
unavoidably state contingent, and those contingencies include the possibility of the policymaker
discovering that it had not been as credible as it had assumed. Communicating that state contingency
in the form of a series of interest-rate paths would be formidably difficult. It is not obvious to me that a
fan chart for the interest rate delivers this21 unless accompanied by a clear explanation of what states
of the world would take the central bank's rate to different parts of the fan. So the question boils down
to how the policymaker's reaction function can best be conveyed.
At the Bank of England, we have tackled this by publishing as complete an account as we can of our
analysis of the economic outlook, including the risks. In the minutes of our meetings, we describe how
those risks feature in our policy judgments. And individually, we explain the reasoning behind our
decisions and our view of the outlook in Select Committee appearances, speeches, etc. The
underlying question here is whether a more effective communication policy is based on explaining the
underlying analysis or on providing what many might wrongly perceive to be the 'answer' in the form of
a path for rates. In a world where attention to our analysis is limited, it may be preferable to keep our
'audience' focused on the MPC's analysis of the outlook for output and inflation.
Sometimes that analysis lends itself naturally to a contingent statement, by individual members, of a
possible path for policy. I have already referred to one such example around the end of
2003/beginning of 2004.
In a similar vein, circumstances may arise where we explained the broad path for inflation we were
trying to deliver. For example, a shock to the economy might be sufficiently nasty that returning
inflation to target on the usual timetable would threaten undesirable volatility in output. We might then
want to set policy in a way that accepted deviations from the inflation target for a period, while
committing to achieve the target in the medium run. Related to that, our mandate makes specific
provision for communication if inflation outturns were to miss our target of 2% by more than one
percentage point. In those circumstances, the Governor of the Bank would be obliged, as part of the
Committee's public accountability, to write an open letter to the Chancellor of the Exchequer
explaining why inflation had deviated from target, the Committee's plan for returning to target, and its
time horizon for doing so. Such circumstances have not yet arisen, but they illustrate that provision is
made for theCommittee to explain what commentators would call its strategy.
The debate is certainly interesting, and it should go without question that, like policymakers
everywhere, I am very much in learning mode over these issues.
(b) Is there a stabilisation bias?
Inflation targeting has been characterised as 'constrained discretion' in the sense that the central bank
makes policy choices, but choices disciplined by a clear objective.22 Exploring the implications of
discretion, Michael Woodford and Lars Svensson have argued, in a series of papers23, that optimal
policy suffers from a stabilisation bias, arising from time inconsistency. Any central banker's ears will
prick up at this, given the importance of an earlier literature - associated with Kydland & Prescott,
Barro, Fischer24 - in helping to explain the inflation problems of the past and to make the case for
central bank independence.
The 'old' problem was about the incentive of a monetary authority to cheat, or renege on promises, by
generating surprise inflationary booms in order to secure an increase in output and jobs. This was,
indeed, pretty tempting for politicians when they had their hands on the interest rate lever. In a rational
world, the result was no permanent increase in jobs but a higher-than-desired steady-state rate of
inflation. And the solutions variously offered by the academy included appointing a 'conservative
central banker' more averse to inflation than society at large, or writing a 'contract' that incentivises the
monetary authority to do the right thing25.
In practice, the solution has amounted to a combination of central bank independence, clear goals,
and transparency. These real-world central bankers care about ensuring that nominal magnitudes do
not distort economic decision taking, and they care about their reputations. But they are not
'conservative' in the sense of being 'inflation nutters'. Rather they are 'dutiful' in the sense of sticking
to a clear, symmetric mandate. That, many would argue, has been a necessary condition for achieving
credibility.
But now it is argued that a monetary authority does, after all, still have an incentive to cheat. This time,
not on its delivery of price stability in line with a target over the medium-to-long run, but rather in how it
stabilizes shorter-run fluctuations in demand and inflation in the face of shocks.
As I understand it, broadly the argument runs as follows. Assume that a shock to costs hits the
economy; the oil price rise over the past couple of years might be the kind of thing. In the short-run,
demand and output will be pushed below the economy's 'trend' path, and inflation above the
authority's target. In the story, to bring inflation back to target, the central bank raises its policy rate
and announces that it will keep it higher for a while. Because it is believed, near-term inflation
expectations drop back in line with the target. That being so, in order to avoid 'lost' output, it is now
optimal for the central bank to reduce its policy rate back to where it was, ie not to leave it higher. The
central bank has therefore not done what it