Graph of Risks to the Inflation Projection (GRIP)
2nd Situation Report 2012
The model simulation results captured in the GRIP represent a broadly neutral balance of risks to the inflation forecast published in Inflation Report I/2012 amid a slightly lower outlook for interest rates. The exchange rate and the foreign environment have a slight downward effect. This is partly offset by higher domestic inflation. The evolution of the domestic economy including the labour market (the Initial State point) and interest rates is in line with the forecast.
Outside the GRIP simulation, there is a downside risk to inflation associated with the currently stronger exchange rate compared to the average for the quarter so far, which enters the GRIP simulation. A higher outlook for oil prices and short-term outlook for food prices are risks in the opposite direction. General uncertainties prevail in the foreign environment, although they have moderated and become more symmetrical recently.
The Monetary and Statistics Department therefore assesses the overall balance of risks to the Inflation Report I/2012 forecast as being slightly anti-inflationary.
