We have a good policy framework which we believe can handle regular cyclical dynamics acceptably well, and at this stage we do not see any imminent end to the expansion. Even so, it pays to be on the lookout for potential problems. We have to live with the risks emanating from the world economy.
Under these circumstances, if monetary policy is tightened appreciably in the face of a surge in headline inflation, the policy would likely be excessively tight and lead to an unnecessary decline in employment.