Consistent with the judgement that the interest rate which helped move inflation up to the target was not the interest rate which would keep it there, we moved rates up by 150 basis points in five steps. We didn’t wait until we had a forecast that inflation would clearly exceed 3 per cent before moving.
In the event, inflation did end up exceeding 3 per cent in 2001 - which confirms that some tightening had definitely been required. In 2001, policy was being eased given the anticipated effects of the global recession and so on, even though inflation was turning out a bit higher than expected.