This complex environment required a considerable real-exchange rate depreciation, of around 30%, which previously had only taken place under a severe balance of payments crisis and high, double digit inflation episodes. In this context, monetary policy was tightened to allow for an orderly adjustment of the economy and domestic financial markets.
If fiscal policy takes the lead in stimulating the economy, this can result in a buildup of government debt. If monetary policy takes the lead, this brings about a buildup in household debt. In both cases, stimulus leads to a buildup of debt over time, whether public or private. And excessive debt levels create a vulnerability, making the economy less resilient to future shocks.