Had this been done, the policy stance would have been different and so might have been the outcome. However, this was a debate on detail, not on the basic approach. One line of argument that has emerged after the crisis is that inflation targeting – assigning a relatively low weight to the output gap in the Taylor Rule – had been discredited.
After the revelations of corporate malfeasance, the market punished the stock prices of those corporations whose behaviors had cast doubt on the reliability of  BIS Review 22/2004  1  their reputations. Recent allegations on Wall Street of breaches of trust or even legality, if true, could begin to undermine the very basis on which the world’s greatest financial markets thrive.