As regards monetary policy, the current environment is complex, with a number of uncertainties, in particular, high oil prices, still persisting. There are risks to the outlook for both growth and inflation; however, the central scenario is still for ongoing moderate growth with underlying inflationary pressures remaining contained. The Governing Council remains vigilant and we will continue to watch developments closely in coming months.
The lack of depth of these financial markets and the volatile inflation rate  BIS Review 72/2001  3  paved the way for sustained high real interest rates. The high real interest rate paid on domestic debt therefore increased the borrowing requirements of the public sector.