5 Given our weaker economic growth, however, these ULCs should have moderated, resulting in less persistent inflation. They, of course, did not – or at least not by as much as we would have liked to see. Moreover, with food prices rising and the currency depreciating, the risk of ULCs rising much more strongly has been fairly high.
Finally, emerging economies have different policy options at their disposal in the unwinding phase, especially to try to prevent and manage the surfacing of possible problems. The strengthening of the foundations of domestic financial stability and the implementation of structural reforms to enhance productivity growth and investment, have never been more important.