All of this communications work is designed to strengthen the credibility of the inflation target and thus both to increase the likelihood of achieving the target and to minimise any social cost in doing so. Secondly, having an explicit inflation target provides a very useful discipline on the Reserve Bank itself, and helps considerably in keeping our deliberations focused.
Looking further ahead, over the policy-relevant horizon, annual HICP inflation is expected to remain below 2% in 2010, reflecting mainly ongoing sluggish demand in the euro area and elsewhere.