Should policy-makers react more strongly, and faster, to negative deviations of the inflation forecast from the inflation objective, compared with positive deviations? Suppose that the economy was characterised by a linear structure, with slowdowns and recoveries of similar intensity, and that the policy-makers’ preferences have the form of a quadratic loss function.
The Central Bank has a deep involvement in small business development – not by actually providing financing ourselves, but in a catalytic way, by encouraging financial institutions to be responsive to the financing needs of SMEs. Recently, the Bank expanded its support for SME development through its National Financial Literacy programme.