Notwithstanding the exogenous shocks which these economies face, it is increasingly clear that a sound macroeconomic framework is a prerequisite for sustainable growth. At the same time, structural weaknesses often undermine resilience and compromise the buffers necessary to cope with economic shocks.
The close link between monetary developments and evolving imbalances in asset and credit markets implies that monetary analysis enables central banks to detect such imbalances at an early stage and to respond to the implied risks to price and financial stability in a timely and forward-looking manner.