This is plotted against the excess of the rate of inflation over the previous four quarters relative to the inflation target. Chart 3 plots the two-year and the three-month money growth rates. This combination offers the opportunity to review shorter-term movements in money supply in the context of early warnings of more persistent deviations.
The important issue is whether the reduction of worldwide inflation will persist or be a temporary phenomenon. The worldwide decline in inflation From the 1950s until the late 1960s, inflation rates were relatively contained, and episodes of high inflation were rare. Then, especially following the early-1970s collapse of the Bretton Woods fixedexchange-rate system, inflation became a worldwide phenomenon.