But the initial adjustment to the acceleration in productivity also brought temporary bonuses that were not likely to persist over the longer run. They took the form of a temporary spurt in demand growth – pushing the unemployment rate progressively lower – and a temporary disinflationary impetus, preventing the increased utilization rates from immediately raising inflation.
The persistent above-trend growth and progressive increase in utilization rates suggested to me a danger of overheating and higher inflation. This concern encouraged a series of tightening moves in an attempt to slow economic growth at least toward the new higher trend and thereby prevent still higher utilization rates.