This of course reflects the fact that our economies have long been intertwined on a broader front. As we begin to recover, though, there is one important emerging contrast. Inflation has been persistently negative in the Republic for over a year, reflecting the unwinding of the bubble against the background of a strong currency.
Measures in response and future tasks As I pointed out earlier, due to the heightened volatility of emerging market country capital flows, their central banks are hard put to come up with appropriate policy responses. Since the overriding priority in policy responses should be placed upon ensuring domestic financial stability, it is absolutely vital to keep inflation expectations low and stable.