I hope that everybody now understands that the MPC sets the level of its key policy rate with respect to achieving core inflation within the 2-8% range. That should help anchor inflationary expectations.
If the level of the key policy rate were specified with respect to achievement of some other objective, for example a certain level of the exchange rate, the rate of inflation would overshoot the target. Inflation expectations would increase, we would loose our anchor and we would be back battling inflationary cycles of the past. 3.