This, in turn, places a premium on credibility and effective signalling of policy intentions. The use of interest rates as the principal operating instrument does not mean, it should be stressed, that the volume of money and credit is considered unimportant as a determinant of inflationary trends.
Thus, if it is a goal of policy to push term premiums far down into negative territory, one should be prepared to accept that this approach may bring with it an elevated conditional volatility of rates and spreads.