In late 2009 we began the transition the process of transition by adopting what we called a “flexible monetary targeting regime”, which involved the introduction of more regular interventions in the money markets to try and dampen volatility in interbank interest rates, although without targeting a particular interest rate, and a monthly review of the monetary targets with the possibility that they might be revised to take account of changes in the macroeconomy.
However the transitional monetary policy regime proved somewhat unsatisfactory in that it did not provide a clear anchor for monetary policy. The flexible aspect of the monetary targeting framework arose because the BOU had lost confidence in the efficacy of applying rigid monetary targets, but the framework provided no other monetary policy anchor to replace the monetary targets.