Although the Czech Republic was able to pursue an independent monetary policy during the crisis, Slovakia managed to maintain a 0.9 percentage point advantage over that country in terms of average annual GDP growth between 2009 and 2016.9 As a result, the gap between Slovak and Czech GDP per capita narrowed from 21% in 2008 to 13.8% in 2017.
Yet that discretion is always bounded by two factors: the nature of the shocks hitting the economy; and the credibility of our objective in the face of those shocks. If the economy has been hit predominantly by demand shocks, there is no case for the central bank to delay policy action.