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mpc: 11 underlying inflationary pressures, the following considerations led them to prefer a smaller rise. As the Committee had discussed, there were signs, for example in surveys, that there might be some slowing in demand growth. There was time to wait to gather evidence on this as inflation was projected to be below the 2½% target for nearly all of the forecast period. Separately, given market expectations, an increase of more than 25 basis points risked putting undue upward pressure on the exchange rate, which would tend to restrain net trade and import prices whereas policy action was needed to address domestically-generated inflationary pressures. 39 One member explored the arguments for an interest rate increase of less than 25 basis points. The profile for inflation implied that the pressures on the economy's supply capacity needed to be restrained in the medium term but that there was time to do this, particularly given the uncertainties about the outlook. An increase of less than 25 basis points would assist that process and would, in particular, provide a clear signal of the Committee's resolve in addressing those medium-term concerns, while recognising the downward pressures on inflation in the near term, when it was projected to drop materially below the 2½% target. It would be easier for the Committee to introduce smaller-than-25 basis point changes now having already tightened policy in September. However, as this would be the first time rates changed by less than 25 basis points, there was a significant risk that the reasons would be misunderstood. The better course was, therefore, to raise rates by 25 basis points. 40 Various arguments were advanced for maintaining the official interest rate at 5.25%. Inflation was below target and was set to remain so over the next two years. The outlook depended to a significant degree on two material factors: the exchange rate, and the balance of aggregate demand and the economy's supply capacity. Recent export outturns added weight to the view that sterling would be stronger than the path assumed as the best collective judgment; and survey measures showed capacity utilisation falling slightly, perhaps because investment during this upswing had been strong. There were significant downward pressures on prices, reflecting not only one-off regulatory measures but also an ongoing intensification of competition throughout the economy. This would help to restrain earnings growth below the path assumed as the best collective judgment. Monetary conditions, as reflected in the yield curve, had tightened significantly in recent months, and were probably bearing down on demand by rather more than had been assumed in the published fan charts. Taking these considerations together, the steep rise in the central projection of inflation 18 months hence was highly uncertain and there were clear downside risks to it. With a symmetric inflation target, a further tightening was not yet needed.