BIS Review 128/2008  1  In the situation we face today, however, the financial markets are very unstable and their future direction is unclear. We therefore need to be cautious in coping with price pressures.
This is because the downside risks to growth increase while the upside risks to prices dwindle, as the financial market turmoil has an ever greater impact on the real economy. A forward-looking monetary policy that takes account of medium and long term macroeconomic trends also becomes more difficult at a time like this, as uncertainty mounts concerning economic conditions at home and abroad.