An exchange rate problem that started in a small economy in Southeast Asia has, within a little more than one year, created a contagion that may potentially impact the growth performance, as well as financial performance, in the most highly developed industrial economies. Similarly Year 2000 problems, if not addressed, remedied and planned for, can have unexpected spillover effects.
These forecasts are often presented and discussed by central banks in the form of published inflation or monetary policy reports. Such reports can and should be an important element of a central bank’s communication and transparency about the policy process. But a number of interesting questions arise.