At the end of 1999, the National Bank for the first time published a medium-term inflation forecast and a target range for the three-month Libor rate. It fixed the target range at 1.25% - 2.25%. This implied a tightening of monetary policy by the National Bank so as to ensure that inflation remained below 2%. The medium-term inflation forecast showed an average inflation rate of 1.5% for 2000 and a slight increase to 1.8% by 2002. This rise in inflation reflected the anticipated economic upswing, which - so experience has shown - would normally go hand in hand with upward price trends.
