By mid-2017, the national economy had largely recovered from the oil price shock of 2014–15, although weakness remained in some regions. Still, growth was broadening across sectors, and the output gap was expected to close by the end of 2017. Inflation was rising, although it remained below 2 percent.
In this context, we raised the policy interest rate in July 2017, two years after we had lowered it to 0.5 percent. In all, we would tighten policy by 125 basis points by the end of 2018. In reviewing this period, I will note several important considerations from a risk management perspective and some key contrasts from the previous case study.