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With core inflationary pressures well contained, the Central Bank is maintaining the Repo rate at 2.75 per cent which remains supportive of current economic conditions. However, as the pace of economic activity strengthens, the Central Bank is giving greater consideration to managing inflationary expectations in calibrating its monetary policy instruments.
As of late July 2014, signals are mixed regarding the outlook for global growth. In its latest World Economic Outlook (WEO) Update, the IMF indicates that the global recovery continues but at an uneven pace, and that downside risks remain. In the United States, earlier optimism about growth prospects has moderated following an unanticipated sharp contraction in the first quarter of 2014, even though a rebound in activity is already underway.
Growth is improving for some economies in the Euro zone, while the economic recovery in the United Kingdom appears to be sustainable. Growth in most emerging markets, including China, remains at a slower pace than before, partly due to softer external demand. Although geopolitical tensions are escalating in several regions around the world, expectations of changes in monetary policy in the major industrial economies dominate sentiment in global financial markets.