Since then, the economy has performed better and inflation has been higher than in that scenario. As a result, interest rate expectations have moved higher. It is too early, though, to conclude that inflation is sustainably in the target range. In underlying terms, inflation has just reached the midpoint of the target band for the first time in over seven years.
And this comes on the back of very large disruptions to supply chains and distribution networks, which are expected to be only temporary. It also comes at a time when aggregate wages growth is no higher than before the pandemic, which was associated with inflation being persistently below target. In these circumstances, the Board is prepared to be patient.