This in itself contributed to a more forward-looking approach to wage outcomes in general and, throughout much of last year, wage moderation and productivity gains served as important cushions that absorbed some of the inflationary impact of the currency depreciation.
A number of critics of the new framework have argued that inflation targeting is an untested framework, as no major adverse shocks have put strain on the achievement of low and stable inflation in many inflation-targeting countries. This is incorrect as many inflation-targeting countries are small open economies that have been subject to severe shocks in the aftermath of the 1997 Asian crisis.