First, given that the Bank assesses that risks to prices are skewed to the downside, a wider time span to reach around 2 percent seemed appropriate. Second, the Bank reduced the time span significantly – from one year or more to around six months. This is more likely to reduce the flexibility of monetary policy.
To describe how asymmetries became imbalances, let me briefly recap that large capital flow imbalances had built up for several reasons in the run-up to the crisis. Then, suddenly, a mistrust overburdened regional financing, the economy, and especially fiscal cushioning powers. But there is no need here for details about the ultimate causes that led to the crisis.