If economic developments unfold as we projected and inflation comes down as quickly as we forecast in the January Monetary Policy Report (MPR), then we shouldn’t need to raise rates further. But if evidence accumulates suggesting inflation may not decline in line with our forecast, we’re prepared to do more. Looking at the data since January, Governing Council found a mixed picture.
Overall, though, things are unfolding broadly in line with our outlook. We’ll need to see more evidence to fully assess whether monetary policy is restrictive enough to return inflation to 2%. For now, let me unpack recent developments and share some insight into what we discussed and how we’ll be thinking about things going forward. I’ll start with economic activity.