This is consistent with the Board's guidance that the cash rate target will not be raised until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band. Given the outlook for inflation and the labour market, this is likely to be some years away.
As regards exchange rates, we confirm our position, expressed when the euro rose sharply, that such moves are unwelcome and undesirable for economic growth. Turning to prices, annual HICP inflation was 2.3% in December according to Eurostat’s flash estimate, up from 2.2% in November.