Back in July, we raised our policy rate by a quarter of one percentage point because we judged that the economy was operating, at that time, at a level further above its production potential than had been projected at the time of the April Monetary Policy Report.
As we expected both total and core CPI to remain above 2 per cent, we concluded that some modest further increase in the overnight rate might be required to bring inflation back to 2 per cent over the medium term. By the end of the summer, the situation had changed in many respects.