We have registered 72 consecutive quarters of uninterrupted GDP growth, propelled by broad-based economic drivers, well-managed inflation environment, sound external sector dynamics, and a stable banking system. Headline inflation of 1.8 percent for 2016 reflected the prevailing manageable environment of low and stable prices.
In this way, it could provide an additional stimulus to the economy via inflation expectations. If people expect future inflation to be temporarily higher than anticipated so far, real interest rates will decline even when nominal rates remain unchanged. This, in turn, will induce them to consume and invest more in the here and now.