The latest forecasts of the Bank show that, given this tightened stance of monetary policy and barring any unforeseen negative shocks, the inflation target for 2003 could be met. However, the average annual rate of increase in the CPIX will probably be close to the upper end of the target range and the risks to the forecast are on the upside.
As such, it seems unlikely that monetary policy will be relaxed in the foreseeable future. Although the current stance of monetary policy may be perceived as negative for short-term growth and employment creation, such a view must be compared with the alternative of even higher future interest rate levels, if inflation is not brought under control.