We learn from text books and the inflation experiences of the 1970s that a sharp increase in base money could be inflationary. On the contrary, in the current episode inflation declined below target levels in many advanced countries. 3  Bank of England (2012), “The Funding for Lending Scheme”, Quarterly Bulletin 2012 Q4.
9  Looking back, monetary policy to work on expectations has played a major role in keeping inflation in check following the bout of high inflation worldwide during the 1970s. The introduction of inflation targeting in many economies since the 1990s as well as the remarkable developments in monetary policy theory implicitly focused on responding to high inflation.