First, let us summarize the inflation development in 2018:  Last year, consumer price inflation declined to a five-year low of 9.8% (versus 13.7% in 2017). The reversal of the trend after the rise in inflation in 2017 is primarily due to the NBU’s tight monetary policy. The series of interest rate hikes that started in October 2017 increased the attractiveness of saving.
The idea was taken up by Keynes in the Treatise on Money, and further refined in the General Theory.4 The modern world is more complex than the world of Wicksell and Keynes. We do not expect to drive monthly policy decisions direct from the dusty pages of old books, however classic they may be. But the essential insight is still useful.