But  BIS Review 12/2006  7  we also thought that the rise would be gradual, against a backdrop in which inflation expectations were pretty well anchored. Hence, we felt that in formulating our policy response, we had time on our side, a luxury previous generations of policy-makers usually did not have.
Furthermore, procyclical fiscal policies should be avoided in all countries. This is of vital importance to ensure fiscal sustainability in preparation for the impact of ageing populations and is fully in line with the revised Stability and Growth Pact. Reviewing public expenditure and taxation so as to improve the quality of public finances would additionally foster economic growth and fiscal sustainability.