In April, lending rates reached their highest level in more than a decade, standing at 4.4% for business loans and 3.4% for mortgages. Second, our monetary policy is also starting to be transmitted to the demand components that are typically more sensitive to interest rate changes: housing and business investment, as well as durable consumption goods.
This is one reason why we are seeing a pronounced divergence between weakening manufacturing and resilient services. The strengthening transmission of policy tightening to the economy helps explain why inflation is projected to decline further towards our target, since it will increasingly dampen demand.