What can be achieved through monetary policy in a small, open economy in order to meet these challenges? As I mentioned previously, the task of monetary policy-makers is to set an interest rate path which ensures that the inflation target is achieved with the least possible economic sacrifices. Global financial turbulence has so far caused only limited increase in risk premia in Hungary.
As has been shown before, the Japanese government (or more precisely, some of its divisions) was partly responsible for the excessive optimism of the late 1980s. This suggests that it is not an easy task at all to convince the market (and parts of the government) plagued by excessive optimism.