“The general view among Council members was that maintaining a tight monetary policy stance remained necessary”, while they agreed that “maintaining financial market stability remained key to achieving price stability”, according to the minutes.
The minutes show the option to keep the base rate unchanged was the only one discussed at the meeting.
Council members acknowledged that mandatory and voluntary price restrictions had “contributed significantly” to a deceleration of headline CPI, but underlying inflation had “remained strong” in the economy.
The members emphasised that a disciplined monetary policy was “indispensable” for underlying inflation to decline to a level consistent with price stability. Some members pointed out that inflation expectations had declined but remained at “a level significantly higher than what would be consistent with price stability” and they highlighted the importance of anchoring those expectations.
Several Council members noted that domestic financial markets had remained relatively stable even in a temporarily more volatile global financial market environment due to the conflict in the Middle East.
Several decision makers said that the stability of the foreign exchange market was of particular importance for achieving the inflation target and maintaining financial market stability.
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