• Underlying annual inflation rate is 1.25% to 1.75%.
• Sees consumer prices rising 0.5% in 3Q, 4Q.
• Sees inflation target in bottom half of 1%-3% target band in 2012
• Forecast inflation will accelerate toward top half of taget band in 2013 as commodity prices stabilize, retailers rebuild margins and currency gains fade.
• Says spare capacity in the economy is limited.