Graph 3  Several points are of interest. First, through 1997 and 1998, inflation was below the 2-3 per cent target, but was expected to rise over the ensuing period. The rise in inflation did eventually occur, but took longer than originally expected. What was going on here?
Firms, as a move toward solving the problem, have been diversifying their employment patterns. As a result of such efforts, labor force participation rates among the females and the elderly are increasing and the total number of employees is growing at around 1 percent a year despite the diminishing working-age population.