The experience of banks facing asset-liability mismatches in the South East Asian countries during 1997, underlined the need for putting in place sound asset liability management (ALM) practices. The ALM framework was, therefore, complemented with guidelines on risk management.
When inflation is driven by supply-side pressures, an undue tightening of monetary policy would aggravate the negative output effects of the supply side shocks. Accordingly, the main challenge is to bring down inflation, while not triggering a sharp decline in output and employment.