Nor can we assume that a rising exchange rate will exert a consistent dampening force on inflation of traded goods and services over the longer term, since exchange rates do not keep rising indefinitely. The ability to supply an increasing proportion of additional demand from imports probably also has some limit, though it is hard to tell where that might be.
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.