The large interest savings and windfall tax revenue coming from the plummeting interest rates and booming private spending of the second half of the 1990s were used to finance higher current public spending.
Chart 15 shows the evolution of the projected inflation path (as summarised by the end-of-horizon projected inflation rate). Over the period 2018-2019, the end-of horizon projections for inflation had gradually declined before the pandemic, such that the risk of downside de-anchoring was already elevated before the pandemic.