However, in general all major central banks stepped up their intermediation role with a view to addressing the liquidity squeeze and, in doing so, they showed a certain degree of convergence in operating procedures. In particular, central banks: •  Pursued more active reserve management, reassuring banks of their orderly access to overnight funds and increasing the frequency of their operations.
Likewise, the staff may have overestimated the ongoing effects of the dollar decline on inflation, as the models in use at that time inevitably gave considerable weight to the experience of the 1970s. Empirical estimates unavoidably lag these sorts of endogenous changes in inflation dynamics. For the period from 1996 to 1998, inflation also came in consistently lower than the staff forecast.