The Bank of the Lao People's Democratic Republic (the central bank) is in the process of tightening monetary policy. In response to the global recession, the bank lowered its policy interest rate by a total of 200 basis points in 2009, to 5% (a record low), and provided billions of kip to fund local infrastructure projects. However, a double-digit year-on-year increase in food prices in September 2010 pushed consumer price inflation above 8% year on year in that month. As a result, the central bank has raised interest rates, with the most recent rise in its policy rate, in September 2010, taking the rate to 12.5%, from 10% previously. The government has pledged to keep annual inflation below the rate of GDP growth, which means that further increases are likely if inflationary pressures continue to build. There will be steady improvements in the competitiveness of the banking system in the forecast period, owing to gradual reforms (such as the lowering of entry barriers) initiated by the central bank. In addition, non-performing loans held by state-owned commercial banks have been falling as a proportion of total loans, although this has been partly an effect of the overall increase in lending.