I said myself, on behalf of the central bankers participating in the Global Economy meeting in 2006 and at the beginning of 2007, that a significant market correction was likely because risks were underestimated, insurance premia too low and volatility abnormally low.
The Bank’s research has generally found that the further benefits from reducing these distortions imply an optimal rate of inflation closer to, or even slightly below, zero. In a perfect world, we would pursue those gains through a lower inflation target. But we do not live in a perfect world.