We estimate a flexible model of the behaviour of UK monetary policymakers in the era of
inflation targeting based on a new representation of policymaker’s preferences. This enables
us to address a range of issues that are beyond the scope of the existing literature. We find a
complex relationship between interest rates and inflation: interest rates are passive when
inflation is close to the target but there is an increasingly vigorous response as inflation
deviates further from the target. We also find that the response to the output gap is linear and
find no evidence of a nonlinear Phillips curve
