In such an uncertain environment, it is vital that the EM CBs continue to ensure that their monetary policy decisions contribute to the orderly normalization of the financial conditions in their economies. Sure, a prudent and data-driven approach, mindful of policy tradeoffs, is necessary.
In this context, a key challenge for policy makers, particularly CBs, is to respond to the crisis in a timely and decisive manner, but without affecting the resilience of both the financial markets and the economy. As it has been repeatedly mentioned today, the current inflation spike was badly forecast by CBs and markets.