The Monetary Policy Committee (MPC) acknowledged heightened risks to the inflation outlook arising from both domestic and external sources throughout 2015. These risks were characterized by tight financing conditions, declining commodity prices, power supply constraints and rationalization of key sectors, including price adjustments of petroleum products and utility tariffs.
Against this backdrop, monetary policy remained tight with the objective of re-anchoring inflation expectations and steering inflation towards the medium term target.
During the September and November 2015 meetings, the Committee took cognizance of additional risks emerging from the possible second round effects of the expected increases in utility tariffs and tightened monetary policy by 100 basis points consecutively.
At the January 2016 meetings, the Committee highlighted risks emanating from slower growth prospects in emerging market economies, declining commodity prices, tightening external financial conditions, as well as the unanticipated upward adjustments in petroleum product prices.
These risks could be transmitted to the domestic economy through the balance of payments and execution of the budget with some implications for growth and the inflation outlook.
