In addition, the Bank provided extraordinary guidance on the likely path of interest rates that would be necessary to achieve the inflation target in order to maximize the monetary stimulus from its policy rate. The focus of monetary policy on inflation control through the financial crisis and global recession provided a beacon as well as an anchor for the bold policy response.
The series of decisions that resulted in the policy interest rate being lowered effectively to zero reflected the symmetric commitment to target 2 per cent inflation. This policy response, coupled with the conditional commitment to keep the rate that low for a fixed period of time, allowed real interest rates to go negative and helped to re-establish confidence among businesses and households.