The Bank’s inflation forecast which is published in the latest Monetary Policy Review, shows that CPIX inflation is expected to rise gradually towards the upper limit of the inflation target range before moderating again. There are a number of factors underlying this inflation outlook.
Macroprudential policy uses more targeted instruments, which makes it better suited to addressing growing imbalances in financial markets. The question is whether or not a clear separation of responsibilities – in terms of "macroprudential policy takes care of financial stability" while "monetary policy only pays attention to price stability" – actually makes sense. 7 In other words, is monetary policy out of the woods?