If the expectations of households and businesses are central to the decisions they make, the same is also true of the Bank. Since mid-2014, inflation has risen to around our 2 per cent target.
This increase in inflation is being temporarily fuelled by the depreciation of the dollar since the beginning of 2013, as well as by some sectoral factors, particularly higher prices for meat and communications services. Since there is still material excess capacity in the economy and competitive pressures remain intense in the retail sector, the Bank estimates that underlying inflation remains below target.