This is to avoid the impression that we are following a preordained, mechanical policy path. The appropriate pace for interest rate increases will depend on Governing Council’s assessment at each fixed announcement date of how the outlook for inflation and related risks are evolving. The Bank began to stress the term “data dependence” during this period.
This was to reinforce that our policy decisions are never predetermined and that markets should rely on their own assessments of the data and their understanding of the Bank’s reaction function in developing their forecasts of our policy. The future of risk management in a COVID-19 world The Bank has come a long way in adopting a risk management approach to our inflation-targeting framework.