•  But what if the inflows are direct, that is to say, loans directly from foreign entities to domestic companies? In that case, the only mechanism to prevent excessive leverage, and foreign exchange exposure, may be by imposing controls.
The short-term goal was set at 1 percent for two main reasons: (1) to take into account past price movements (or price perceptions among households and firms); and (2) to accommodate the view that a longer-term goal could be achieved in conjunction with efforts to strengthen potential economic growth by various constituents, including the government, the Bank, financial institutions, and firms.