While I have thus far explained the baseline scenario for economic activity and prices, the Bank is also fully aware of the risks concerning such scenario. Upside risks to the scenario are developments in emerging and commodity-exporting economies. The robust growth of emerging and commodity-exporting economies has driven the pick-up of Japan’s economy.
At that time, the EMS had been exposed to a massive flight primarily into the D-Mark, which resulted in significant tensions among EMS currencies. This caused massive adjustment problems for those economies with appreciating currencies and inflationary pressure.