In considering policy options the Bank could take, the Bank’s options within the conventional monetary policy framework were limited, given that short-term interest rates – ranging from overnight to longer-term rates – were already at levels that left little room for a further decline.
The government, in addition to the market, can usefully address energy concerns, for example, by supporting basic research and adopting well-designed regulatory policies to promote important social objectives such as protecting the environment. As we saw after the  4  Total PCE inflation (four-quarter change) went from 5 percent in 1973:Q2 to 11.4 percent in 1974:Q4, an increase of 6.4 percentage points.