Although the economy lost momentum in the subsequent months, the decline was moderate and the overall economic capacities remained extremely stretched. The National Bank assumed, as most observers did, that the US economy would recover slightly towards the end of the year. Inflation measured by the national consumer price index, which had dropped significantly in the first quarter due to special factors, rose again in the two following months and, at 1.5%, roughly equalled the average recorded in 2000. The new inflation forecast presented at the news conference on 14 June showed that the National Bank, assuming a short-term interest rate of 3.25%, expected inflation to stabilise at around 1.5% in 2003. At its monetary policy assessment in June, the National Bank therefore decided to leave the interest rate target range unchanged.
