Government’s fiscal prudence in 2009 paved the way for significant reduction in the fiscal deficit. The second half of 2009 was characterized by consistent declines in inflation from 20.7 percent to 16.9 percent by end November and there are strong indications that inflation will fall further. The currency stabilized in the foreign exchange markets and even appreciated against some major currencies.
Global financial crisis and monetary policy The global financial crisis, as we all know, started in the financial sector but has eventually led to fiscal crises in many advanced economies, not to mention a global recession. In response to the crisis, central banks around the world undertook a wide range of measures.