The inflation forecast published in June 2002 indicated that, with an unchanged three-month Libor rate of 1.25%, inflation would rise rapidly and distinctly near the end of the forecasting horizon. Moreover, the inflation forecast published in December 2002, which is based on a constant three-month Libor rate of 0.75%, showed a similar development. Both forecasts thus signalled that the low interest rate level is appropriate for the time being but cannot be maintained in the long term without jeopardising price stability.
