In 2016, growth had slowed to 0.4%, but we also had inflation outside of our target range, above 6%, and core inflation was nearly 6%, having trended steadily higher over the preceding five years – even as the economy decelerated. To return inflation to target, we had raised rates, to a peak of 7% in 2016.
Then, as inflation began moderating, we were patient, and we communicated that we would prefer to see inflation stabilise at around the middle of the target range. Inflation has since largely cooperated: over the past three years, it has averaged 4.6%.