Core inflation is expected to move a bit above 2 per cent in the coming months but return to the 2 per cent target by the middle of 2007 and remain there through 2008.
The market developments following the referendum suggest that markets have been regaining their calmness, partly reflecting (1) an improved perception of the outlook for the U.S. economy after the better-than-expected employment data released in early July, and (2) the early start of the new Cabinet of the United Kingdom.