Here the most important data were the CPIs for the September and December quarters, both of which were below our expectation. They suggested that inflation was well under control — in fact, we lowered our estimate of underlying inflation after receipt of the December quarter figure in late January — and they also pointed to the possibility that business profit margins were being squeezed.
They thus reinforced the impression that was building of an economy that was slowing more than expected, in a world that was slowing more than expected, and where current inflation and future inflation were within the target zone we aim for under our inflation-targeting regime for monetary policy.