Indeed, I do not even know whether reducing a current account deficit would involve tightening monetary policy (which would push up the exchange rate but slow down domestic spending) or easing monetary policy (which would tend to push down the exchange rate but accelerate domestic spending).
2  The Bank’s view of recent economic and financial developments, determined by the Policy Board at the Monetary Policy Meeting held on May 17 and 18 as the basis for monetary policy decisions. BIS Review 41/2001  1  developments, the possibility that weak demand will intensify downward pressure on prices warrants careful monitoring.