8  BIS central bankers’ speeches  Monetary policy also needs to work alongside other policies that can affect output growth and activity in markets, such as the housing market. For example, the Government’s fiscal policy has been contractionary in recent years and the regulatory framework around the housing market affects the supply and demand dynamics within that sector.
Annual headline inflation is currently 0.1 percent. This is primarily because of the negative inflation in the tradables sector, and the decline in oil prices in particular. Low oil prices are recognised in the PTA as a factor that can legitimately cause inflation to be outside the target band.