When we made our conditional commitment, both words were important: “conditional” and “commitment.” We backed our commitment by offering term financing at the overnight rate for the entire period. And we repeatedly stressed that the pledge was conditional on the inflation outlook.
As it turned out, we raised interest rates weeks before the commitment expired because we saw signs that inflation was returning to its target more rapidly than we anticipated. That conditionality demonstrates that the inflation target remains the Bank’s primary mission. As I’ve said before, forward guidance comes with costs.