These conflicting challenges, and the uncertainties that surround them, call for particular vigilance on behalf of monetary policy-makers, and for a readiness to adapt one’s monetary stance to a changing macroeconomic environment. At present, the Monetary Policy Committee remains of the view that interest rates will have to normalise over time.
Although we gave high priority to the implementation of the Basel II guidelines by the banking supervision and the banks, insufficient progress has been made so far.