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mpc: 9 estimated for any other industrialised country. It was, therefore, desirable to consider whether official policy could do anything to mitigate this. It was noted in that context that the textbook response would be fiscal policy tightening. But that kind of active use of fiscal policy was forsworn under the current fiscal framework, and it was observed that fiscal policy had in fact tightened over the past few years. As to monetary policy, whether the Committee's remit was in principle consistent with taking these concerns into account depended on whether there were different paths of interest rates which could achieve the inflation target but which might have different implications for the exchange rate. It was noted that an interest rate policy which helped to sustain sterling at current or higher levels ran significant risks with the inflation target at some future point when sterling could fall sharply. In the interests of making it easier to meet the inflation target at all times, an interest rate path now that helped to keep sterling lower would be desirable. On the other hand, an interest rate policy which sought to offset the current strength of sterling would risk fuelling domestic demand, which could have adverse implications for inflation further ahead. 35 It was in any event unclear what, if anything, the Committee could do to address these wider concerns given the current conjuncture of market expectations. The market was firmly expecting a 25 basis point rise in the Bank's repo rate. Some members believed that if that were the Committee's decision, there would be little change in either the exchange rate or in money market rates. Some other members were concerned that a tightening of policy, even though expected, could have the effect of putting further upward pressure on sterling when the Inflation Report was released, by making it appear a `one way bet' in the short run. 36 There was also a range of views on the likely market reaction to a decision to maintain the repo rate at 5.75%. Some members thought that, particularly given the Inflation Report projection, it was likely that the market would conclude that a rate rise had simply been deferred, and possibly even that the official rate would end up having to go higher than otherwise. In that case, sterling's exchange rate would be supported and might even rise rather than falling back. Some other members thought that it might be possible to explain a `no change' decision in a way which avoided that risk and which might create conditions in which sterling eased back. RPIX inflation had been below the 2½% target for nine months and, on current evidence, was set to remain so over the coming year. This profile might make a `wait and see' policy feasible and could potentially provide a safe background against which to explain publicly that inflation would undershoot the target if both sterling and interest rates remained at their current levels. That might help to dent any `one way bet' element in sterling's short-run strength. In addition, these members doubted that sterling would rise sustainably on a `no change' decision, because