In my view, as long as inflation expectations remain well anchored, then any higher inflation would be transitory – as proved to be the case last year – and the appropriate balance in fulfilling our dual mandate would likely imply little change in the path of short-term nominal rates, in part because such a policy response would cause real interest rates to be somewhat lower for a time and thereby provide additional policy accommodation.
Once again, then, the role of inflation expectations remains of central importance to the proper stance of policy. 10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15