The Bank continued with this restrictive monetary policy stance through most of the late 1950s and into the early 1960s. In the face of rising unemployment and weakening economic activity, inflation dipped below 1% by the spring of 1961. Relations between the Bank and the Minister of Finance had deteriorated sharply, and numerous government ministers had demanded a change in policy direction.
The increase in imports of consumer goods has come to a halt and this is expected to alleviate the downward pressure on prices to some extent, but the faster pace of decline in wages may reinforce the ongoing decline in prices, especially that in services prices.