As can be seen in the minutes of the Executive Board meeting on 7 February 2002, I entered a reservation against the decision to leave the interest rate unchanged. I would rather have seen an increase in the interest rate of 0.25 percentage points, which is not any severe tightening of policy, but should rather be seen as not stepping so hard on the gas. 6  BIS Review 13/2002
The influence of monetary policy in the short and long run – research At the end of the 1950s the economist A. W. Phillips found a negative relationship between unemployment and inflation by studying data from the UK for the period 1861-1957 1 , a relationship that is usually referred to as the Phillips curve. This shows that higher employment can be achieved at the cost of higher inflation. It was thus long believed that one could "buy” long-term lower unemployment by pushing up inflation. However this relationship was empirically proved not to hold in the long run. In the 1970s, for instance, there were periods with both high unemployment and high inflation, what is known as stagflation. The relationship was also tackled from a theoretical angle. In a famous article from the late 1960s Milton Friedman discussed what monetary policy can and cannot achieve. 2 His view was that in the long run monetary policy is unable to affect real economic variables such as unemployment and GDP. However, it can affect nominal variables such as the exchange rate and price level. In the long run there is a "natural” level of unemployment that is dependent on the functioning of the labour market. If monetary policy tries to push down unemployment below this "natural" level, it will only result in higher inflation. Monetary policy therefore risks becoming a disturbing factor in the economy.