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CB mulls publishing inflation survey results

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The Central Bank says it would continue to conduct inflation expectation surveys and even considers publishing the results on a regular basis in order to avoid building up of adverse inflation expectations among the general public and to guide the monetary policy formulation and conduct.

The Central Bank commenced conducting inflation expectation surveys on a regular basis since 2006 and the results of these expectation surveys have only been used by the Central Bank for its internal purposes. As such, the results of monthly expectation surveys are used as inputs for the meetings of the Monetary Policy Committee for the purpose of reviewing and recommending an appropriate monetary policy stance, which is then presented to the Monetary Board to make better informed monetary policy decisions.

“The Central Bank would continue to adopt appropriate monetary policy measures to maintain inflation at low single digits. The impact of significant reductions in domestic energy and petroleum prices following lower international energy prices as well as reductions in the prices of some major essential commodities is likely to result in low inflation, particularly in the first half of the year. Thereafter, inflation is expected to remain at around mid-single digit levels by end 2015,” the Central Bank said in its 2014 Annual Report.

It noted that in the medium term, inflation is expected to be maintained in the range of 3-5 percent although possible reversal in international commodity prices as well as demand pressures emanated from the expansion in money and credit aggregates and wage pressures, could pose upward risks to inflation projections.

“In such circumstances, the Central Bank would adopt timely policy measures to arrest building up of demand pressures and support the government’s efforts to improve supply conditions and productivity, thereby creating a conducive environment to sustain the low inflation regime going forward,” the Annual Report said adding that the monetary policy conduct of the Central Bank would be increasingly aligned with a Flexible Inflation Targeting (FIT) framework in the period ahead.

“Under this framework, the Central Bank would be primarily concerned with key macroeconomic variables, mainly inflation and economic growth. Also, while broad money aggregates would continue to remain as the key indicative variables to guide the conduct of monetary policy, the Central Bank would increasingly rely on the overnight interbank interest rate as its operating target,” the Central Bank has further pointed out.

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