Data received since then had suggested that the inflation risks had shifted somewhat to the upside. The Board responded to this shift in risk with a further lift in interest rates. The Board is continuing to assess the central forecast and the risks and will conduct a full review at its next meeting in early August.
As part of that review, we will be assessing the many cross-currents affecting the inflation outlook. On the one hand, there are ongoing pricing pressures from several factors, including: the high level of capacity utilisation; strong growth in unit labour costs (mainly because of weak productivity growth); a big pick-up in rents; and higher prices for electricity.