This has been critical in stimulating the pick-up in bank lending that we are currently witnessing. Later in 2014, however, the inflation outlook worsened due to the steep fall in oil prices. Very low oil-driven inflation is not necessarily problematic for the central bank if that inflation is perceived as being temporary and if, as a consequence, inflation expectations remain unchanged.
But what we saw was that inflation expectations were tending, at all horizons, to become dis-anchored from our price stability objective and increasingly affected by the low level of current inflation. This called for monetary policy to shift up a gear, for two reasons.