As it turned out, we raised interest rates weeks before the commitment expired because we saw signs that inflation was returning to its target more rapidly than we anticipated. That conditionality demonstrates that the inflation target remains the Bank’s primary mission. As I’ve said before, forward guidance comes with costs.
While the general tone of the U.S. data has improved slightly of late and financial markets have held up, high-frequency indicators related to U.S. business investment – where one would expect to see the greatest impact of uncertainty – have weakened. For example, new orders for capital goods have fallen sharply, declining by 26 per cent over the most recent three months.