Evidence has also continued to accumulate of a turn for the better in the countries in East Asia which slumped so sharply during 1997 and 1998. Inflation in Australia, meanwhile, has risen, but very slightly and considerably more slowly than our central forecast of six months ago had suggested.
A possibility which we flagged in our November 1998 Statement – that competitive pressures in international markets would have a dampening impact on the rises in prices for imported goods – has in fact turned out to be the case. In our latest Statement, we have forecast inflation to be about 2 per cent in underlying terms by the end of 1999.