Hence, as things currently look, inflation is more likely to rise during 2008 than to recede. This probability is something which was embodied in the medium-term part of the outlook we released six weeks ago. Data becoming available since then have given more credence to that part of the forecast.
Individual prices, exchange rates, and interest rates, adjust incrementally in real time to restore balance. In contrast, administrative or policy actions that await clear evidence of imbalance are of necessity late. Being able to rely on markets to do the heavy lifting of adjustment is an exceptionally valuable policy asset.