Against the background of a small positive output gap and buoyant aggregate demand, the macroeconomic policy stance was fairly tight in 2000, but it has eased since. Short-term interest rates were raised early in 2000 and then remained unchanged, while fiscal consolidation continued, with the cyclicallyadjusted primary surplus rising by another 0.3 per cent of GDP on a year-average basis. In the context of a significant drop-off in external demand, however, interest rates were brought down starting in early 2001, and concerns over the economic consequences of the terrorist attacks in the United States prompted further cuts. Stepped-up public spending combined with a small projected decline in the revenue ratio should amount to a significant easing in the fiscal stance in 2001 and beyond. Viewed in this light, monetary and fiscal policies have both turned from restrictive to supportive in 2001. However, since this shift in stance will take some time to work its way through the economy, its impact will mostly be felt in 2002.