Since 1998 the Bank has been remarkably successful in containing inflation despite exchange rate instability and the international financial turmoil of 1998 referred to earlier. CPIX inflation averaged 7,1 per cent for 1998 and only rose from a twelve-month rate of 6,5 per cent in February to 7,6 per cent in October 1998 before starting to decelerate again.
Two observations deserve particular attention. On the one hand, a higher degree of competition among mortgage suppliers leads to a strengthening of that transmission. On the other hand, the introduction of greater flexibility in mortgage contracts via the temporary suspension of payment or maturity extensions would result in interest rate changes having a smaller immediate impact on the economy.