Operation of monetary policy

This article covers the period from January to March 1993.

The extent of domestic disinflationary pressures became more apparent during the first quarter. The inflation outturn at the end of 1992 was lower than expected as was output and, with renewed labour shedding, it was less likely that inflation would exceed its target range, even temporarily, in the near term. So a further monetary easing was judged possible without risk to the inflation target, and had become appropriate as a means of sustaining the confidence necessary for economic recovery. It was put into effect with a one percentage point reduction in interest rates on 26 January .

Operation of monetary policy