The Bank's commitment to continue the quantitative easing policy generated expectations that the zero interest rate environment would continue for a certain period of time while consumer prices continued to decline. This is referred to as the "duration effect," that is, the effect of the Bank's commitment regarding the duration of the policy.
In the central scenario, wages growth is forecast to pick up from its current low rate, but to do so only very gradually and still be below 2 per cent at the end of next year.