Partly because most inflation problems were demand-driven over the course of the cycle, there was a continuing belief that if the cycle could be smoothed, inflation would be contained, and both fiscal or monetary policy were available instruments in addressing the cycle.
BIS Review 80/1997  -3-  Curiously, however, the de facto inheritors of this stream of thought took price stability -- the long-term element of monetarism -- and made it a short-term target. In this view of the world, there was no role at all for monetary policy as a cyclical buffer. How was this justified?