Rather, it was made on the basis of the outlook for output and inflation. With the economy currently operating with relatively limited spare capacity at a time when a substantial lift in investment is expected, it was judged that inflation was more likely to rise than fall over the next few years.
To minimize the procyclical effects of the interventions, we called on the banks to increase their internally generated resources by further curbing operating costs, dividends and executives’ and directors’ compensation, consistently with banks’ profitability and capital adequacy. For banks that will have to undertake more far-reaching adjustment, a contribution must come from the sale of non-strategic assets.