As financial consolidation continues, and as banking organizations take advantage of a wider range of activities, the perception that all creditors of large banks, let alone of their affiliates, are protected by the safety net is a recipe for a vast misallocation of resources and increasingly intrusive supervision.
Of course, there are a number of upside and downside risks to the Bank's base-case projection for inflation. But overall, we judge these risks to be roughly balanced. On 4 December and on 22 January, the Bank lowered its target for the overnight rate by onequarter of one percentage point, bringing it to 4 per cent.