Given these favorable inflation assessments, the Monetary Board (MB), during its last monetary policy meeting, decided to reduce its policy rate by 25 basis points (bps) to 4.50 percent, effective May 10, 2019. The MB’s decision is based on its assessment that the inflation outlook continues to be manageable, with easing price pressures owing to the decline in food prices amid improved supply conditions.
If it were the case that an indicator variable or a relatively simple equation could extract the essence of key economic relationships from an exceedingly complex and dynamic real world, then broader issues of economic causality could be set aside, and the tools of policy could be directed at fostering a path for this variable consistent with the attainment of the ultimate policy objective.