Gradual adjustment tends to characterize periods of rate increases as well as periods of decreases. Even the policy tightening that occurred during 1994-95, though distinctly more rapid than most episodes of rate adjustment, involved seven steps over a period of twelve months, with an ultimate increase in the policy rate of 300 basis points.
In contrast, an intermediate scheme – the monetary aggregate approach, combining a dose of flexibility (such as indicative inflation targets), with simple rules on the growth of money supply providing the adequate accountability by the policymakers – may gradually rebuild the credibility lost in the crisis without loosing the necessary discretion to address the contingencies inherent to this stage.