In this context, I would note that we are very aware of the uncertainty surrounding both the projection and the transmission mechanism that links our actions to demand and inflation.18 While it is still early to offer any definitive judgments, I would suggest that so far one of the most important results of the targets has been an increase in the internal discipline of the policy-making process.
The Bank’s commitment to the targets and the need to explain and justify any inability to meet the targets have resulted in a better-focused internal debate on the appropriate policy actions to take and has probably reduced the likelihood that decisions to take such actions will be put off.