Public remarks by policymakers in the run-up to the crisis show that officials were cognisant of the increased challenges for monetary policy brought about by financial globalisation. The remarks by former Federal Reserve Chairman Greenspan noting that the diverging evolution of short-term versus long-term rates in the US represented a “policy conundrum”16 received ample media attention in this regard.
As a result, last year marked a third consecutive year of rapidly rising--and sometimes volatile--domestic energy costs. To be sure, higher energy prices cut into households' purchasing power and the profits of non-energy firms.