The period between mid 2010 and mid 2012 saw a prolonged period of inflation above target. Yet inflation expectations remained well anchored. This was reflected in subdued wage outcomes, leading to a significant decline in real wages. This event seems to me to demonstrate that the credibility of the Bank of England in terms of inflation control was well entrenched.
The Federal Reserve is now studying whether overall improvements in the check-collection system would be sufficient in the near term to justify the Board’s use of its authority under the Expedited Funds Availability Act to reduce maximum hold periods. 4 The likely slowing of the collection of smallervalue checks could make any change problematic in the near term.