So, a central bank certainly does not want to be seen to be accommodating nominal rigidities by consciously aiming at a higher rate of inflation.8 Inflation differentials brought about by the Balassa-Samuelson effect9 are often cited as another reason for seeking to achieve a positive rate of inflation.
Our recent February Monetary Policy Statement outlined that we intend to keep the OCR at a low level for some time to come so as to best ensure we continue to deliver our mandate.