Our research led us to conclude that the 2 per cent target is still appropriate and that monetary policy should be adjusted to address financial vulnerabilities only in exceptional circumstances.3  3  Because the financial system is important for supporting economic activity and for transmitting monetary policy, financial system considerations are always taken into account in the formulation of monetary policy.
This point was unfortunately lost on many of his followers after the Second World War, who advocated government intervention under all circumstances and all states of uncertainty, thus leading to policy mistakes such as the Great Inflation of the 1970s.