When domestic inflation is higher than the forecast inflation of trading partner countries, a downward crawl is implemented; the reverse is true when the inflation objective is lower than forecast trading partner countries’ inflation. Last but not least, the Bank is responsible for investing a portfolio of the country’s foreign exchange reserves, which is a major part of the country’s wealth.
In light of this, the task of central banks is clear. As history has taught us, preserving price stability is an indispensable prerequisite for prosperity. In uncertain times, more than ever, it pays off for an independent monetary policy to ensure price stability and provide a solid anchor for inflation expectations.