The strong domestic demand was also supported by growth in real final consumption expenditure by general government at an annualised rate of about 4 per cent in the first three quarters of 2003. This was mainly due to government purchases of goods and services, while real spending on salary and wages of government employees was rather restrained.
Monetary policy should aim to avoid such risks and keep the expansion on a sustainable track. The second issue is how best to integrate balance sheet policy with interest rate policy.