The two key components of sound macroeconomic management are a monetary policy which has as its primary policy objective the maintenance of low inflation, implemented by a central bank which has the operational independence to set interest rates to achieve this objective.
The BOU has modernised its monetary policy, introducing an Inflation Targeting Lite monetary policy framework, which employs a policy interest rate – the Central Bank Rate (CBR) – to influence demand in the economy. The new framework has already proved to be effective in bringing inflation down.