If that line turns out to have been departed from for an extended period of time, then policy, sooner or later, has to be brought back onto the right course. 6  A discussion of the problem of excessive forward-lookingness in monetary policy is provided in M. Woodford (2000), ‘Pitfalls of Forward-looking Monetary Policy,’ American Economic Review, vol.
90(2), 100-104..  4  BIS Review 48/2002  Incidentally, it is worth noting that historical episodes of asset price ‘bubbles’ have tended to be accompanied by strong and persistent deviations from that reference line.