It is expected that headline inflation will come down to 5-6 percent in 2023, from 10.6 per cent in 2022. However, we need to remain vigilant about the potential effects that further tightening policies by the US Federal Reserve Bank and the European Central Bank may have on yield differentials.
These could create pressures on the local currency, if unaddressed, and could generate further inflationary pressures. In view of the continued upturn in economic activity, Bank staff maintain their real GDP growth forecast above 7 per cent for the year. The economy is forecast to grow by around 5 per cent in 2023.