Implications for policy-makers Now, I’m not suggesting that this complex adjustment process is automatic, and that there’s no role for policy-makers to facilitate the adjustment—on the contrary. The conduct of monetary policy must manage uncertainty as a matter of routine—uncertainty about the economic outlook, about unobservable variables such as potential output, and so on.
Market-based interest rate reform has steadily advanced, resulting in an increasingly important role of interest rate in monetary policy transmission and resources allocation. A managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies was adopted. The RMB exchange rate flexibility was strengthened, and market supply and demand played a role in exchange rate formation.