To the extent that financial imbalances are accompanied by excessive monetary and credit growth with possible implications for the medium term outlook on inflation, central banks do indeed have an obligation to take appropriate action.
As with all of our deliberations on the Monetary Policy Committee, this decision to keep rates at the current level was not an easy one. The global economy remains a source of extreme uncertainty, while the domestic economy is beset by its own challenges – some related to the travails of the rest of the world and others home-grown.