It is difficult to know with precision how much slack remains in the labor market. If the unemployment rate were to continue to fall in the coming year at the same pace as in the past couple of years, it would reach levels not seen since the late 1960s.
This led the Governing Council to reduce its monetary policy rate from 3 per cent to 2.5 per cent in April 1999. The second phase was the period between late-1999 and late-2000 which was characterised by strong inflationary pressures, largely through high oil prices and relatively rapid monetary growth.