Central banks will need to carefully monitor the  6  BIS Review 120/2007  changes to the structure of the economy and to the behaviour of economic agents brought about by globalisation. How should monetary policy respond to the effects of globalisation on inflation?
Therefore, preemptive actions of the sort I have described here would be counterproductive if these actions caused an increase in inflation expectations and in the underlying rate of inflation; in other words, the flexibility to act preemptively against a financial disruption presumes that inflation expectations are firmly anchored and unlikely to rise during a period of temporary monetary easing.