1  In July 2013, the Financial Stability Board (FSB) established the Official Sector Steering Group, which comprises senior officials from central banks and regulatory agencies, to focus on the FSB’s work on interest rate benchmarks given the significant role they play in the global financial system.
But we may not have that luxury at present. The reason is that shocks can change: in certain circumstances supply shocks can morph into demand shocks via second-round effects. In these conditions monetary policy needs to react to what initially appeared to be a supply shock, so as to prevent a destabilisation of inflation expectations. Remember: this is the binding element of our strategy.