Against this background, it is the Bank’s view that inflation in the first half of 2003 will be around the present level of 10 to 12 percent, before falling by the middle of the year and during the remaining months of 2003.
In summary, the BSP uses three tools to cushion the economy against disruptionsinterest rate adjustment, a flexible exchange rate, and foreign exchange market participation. We use a combination of these tools in a well-calibrated manner to keep the impact of external shocks manageable.