The central bank runs the risk of raising the interest rate too fast. Historically, the central bank had overreacted to inflationary pressures, contributing to economic recessions.

The central bank put itself in a box with the top lid open so that it can change its policy quickly in response to changing economic conditions.

The committee members believe that the interest rate is too low, pointing to continuing, gradual increases in the rate. The central bank is reducing accommodation, not tightening monetary policy.

Even with significant employment gains, the central bank wants to see more inflation and pricing power. The fall election is another hurdle. No hike in the interest rate is likely in 2004.