2  BIS Review 131/2008  If these tractions continue and broaden in scope, we may begin to see a further unfreezing of credit and a muting of the negative feedback from the financial turmoil to the real economy.
To date, we have coped quite well, largely because we were in good shape going into it with strong domestic demand and low inflation. This was in part due to the fact that we had taken expansionary monetary policy action between July 1996 and July 1997. The other way in which we have coped well is that our financial markets have behaved very sensibly.