In its early years the ECB was fairly reactive to economic and financial developments (Figure
1). After an initial decrease, between November 1999 and October 2000 its MROs reference
rate was raised in steps by 225 basis points, to a peak of 4.75%, as inflation increased from
below 1% (in early 1999) to above 2% (and to over 3% in May 2001), in a world environment
of accelerating growth and commodity prices. Then, in the early 2000s, large shocks hit the
world economy, i.e. the dot.com stock market crash and the September 11 terrorist attacks in
the US, throwing the world economy into recession. The ECB monetary stance became quite