A second story that could also explain the 1997 pattern of faster-than-expected growth and lower-than-expected inflation is a structural change or a series of structural changes that ushered in a new era of faster economic growth, perhaps lower average unemployment rates, and lower inflation.
Shocks in the form of swings in capital flows would show up more in the exchange rate and less in the level of domestic interest rates. Of course, all other things were not equal in this period. There has been a well-documented decline in macroeconomic volatility in a number of countries over the same period, the so-called Great Moderation.