Graphically, the Taylor curve depicts the menu of possible combinations of output volatility and inflation volatility from which monetary policymakers can choose in the long run. Figure 1 shows two examples of Taylor curves, marked TC1 and TC2. In Figure 1, volatility in output is measured on the vertical axis and volatility in inflation is measured on the horizontal axis.
In addition to the enhancement of monetary easing, the Bank has made regulatory responses in order to ensure financial system stability. Based on an international agreement, the full implementation of the finalized Basel III standards has been deferred by one year, and banks have been encouraged to use their capital and liquidity buffers.