These are the latest in a series of projections which foresee inflation converging towards our inflation aim of below, but close to, 2% over the medium term. Our confidence in the inflation path is also rising. First, the range of uncertainty around the inflation projections has narrowed.
Second, underlying inflation has increased from the very low levels that prevailed in 2016 and is foreseen to rise as the economy continues to expand, capacity utilisation strengthens and labour markets further tighten. Finally, on the third criterion, the projected path of inflation appears to be self-sustained, i.e. resilient to a gradual ending of net asset purchases.