It’s important to note that we conduct our policy symmetrically around the 2 per cent target. We will lower interest rates to stimulate total demand when we see that the trend of inflation is threatening to fall below the target over the next 18 to 24 months.
Similarly, we will raise interest rates to dampen demand when we see that the future trend of inflation is poised to rise above the target. In this way, monetary policy acts as the primary tool for stabilizing the economy. Although inflation targeting has a relatively short history, the experience of many countries so far suggests that this approach brings with it important economic benefits.