CPI inflation is forecast to remain about 3% for the next year, before declining gradually to the 2% target in the middle of 2025. This is about six months later than we expected in April. Our decision to raise the policy rate reflected the persistence in both excess demand and underlying inflationary pressures, combined with our outlook for economic activity and inflation.
The consensus among Governing Council was that monetary policy needed to be more restrictive to bring inflation back to the 2% target. These decisions are difficult, and we did discuss the possibility of holding rates unchanged and gathering more information to confirm the need to raise the policy rate.