Can central bankers in small open economies faced with unprecedented capital flows afford to do just that? How interventionist should a central bank be under such circumstances? How resilient are our monetary policy frameworks? Do we need more sophisticated economic and monetary models to address the monetary policy challenges stemming from globalization?
However, the Committee maintained the view that the rapid rise in commodity prices primarily reflected sharply increased demand for raw materials in emerging market economies, in combination with constraints on the supply of these materials, rather than general inflationary pressures.