Although oil prices have moderated recently, upside risks remain, and a challenge we face in the Bank is to keep inflation within the inflation target range in the face of significant exogenous shocks as posed by the oil price movements. Research on the first and second-round inflationary effect of oil price increases is therefore important for making good monetary policy decisions.
CBCAs are arrangements whereby a central bank provides local currency liquidity by accepting foreign currency assets, such as sovereign bonds in foreign countries, as eligible collateral. Such arrangements already exist in some advanced countries. CBCAs are thought to be an effective framework particularly in times of short-term money market stress.