Other factors, including the aforementioned surge in oil prices, played a role in the deterioration of economic performance in the 1970s. Clearly, though, the theory that a long-run tradeoff exists between inflation and unemployment had sprung a serious leak.
Monetary policy will be particularly data dependent in these circumstances and, as always, we could still be surprised in either direction. We will continue to feel our way cautiously as we get closer to home, fostering economic growth and keeping our inflation target front and centre. 5/5  BIS central bankers' speeches