Zealous intervention in a liquid market with numerous financially strong participants can be a costly and largely futile exercise. In practice, the Bank prefers to leave the determination of the exchange rate to market forces. The Bank disseminates data on the balance of payments, foreign exchange reserves and related matters, thereby helping to inform market participants' decisions.
The base-case projection assumes further reduction of monetary stimulus over time, to keep the economy near its production potential and to achieve the inflation target. The pace of interest rate increases will depend on the Bank’s continuing assessment of the prospects for factors that affect pressures on capacity and, hence, inflation.