Consequently, monetary policy cannot react mechanically to every deviation of actual monetary growth from the reference value. Nor should monetary policy makers be held accountable for keeping monetary growth close to the reference value at a specific point in time. The reference value is not a target – interest rate decisions do not attempt to return M3 growth to 4½% in the short term.
Rather deviations of monetary growth from the reference value need to be carefully analysed, in parallel with a thorough assessment of other indicators. The implications of the deviations for price developments over the medium term should be extracted. Monetary policy should then act on the basis of the information revealed so as to maintain price stability at the medium-term horizon.