Increased confidence in the resilience and efficiency of markets It would have been unthinkable in the 1960s to have suggested that the central bank’s influence over interest rates was, in and of itself, enough to enable it to keep the rate of  9  BIS Review 30/1999  inflation low and stable.
The view at the time was that there were narrow bounds on how far interest rates could be moved, and that these severely limited what the central bank could accomplish by varying them. As a result, moral suasion to affect bank lending policies or direct controls were seen as important additional instruments for central banks.