This outlook would mean that it will be a while before we see sustained reductions in the rate of unemployment. Conditional on the usual set of assumptions about oil prices, the exchange rate and so on, inflation should be consistent with the 2–3 per cent target over the horizon relevant for monetary policy.
The depreciation of the exchange rate last year is likely to continue to contribute to higher prices for tradable items for a while yet. But domestic inflation is likely to remain contained given how slowly labour costs have been rising. The removal of the price on carbon will lower inflation temporarily over the coming year.