This increases our forecast errors and has significant implications when assessing the appropriate monetary policy response. II.How would you compare the policy reaction vis-a-vis previous global crises Central banks around the globe adopted a myriad of measures to counteract the financial instability and liquidity strains derived from the unprecedented disruption associated with COVID-19.
Moreover, central banks restored liquidity to the financial markets by providing liquidity-enhancing measures through existing facilities. Some EMEs used unconventional monetary policy measures for the first time, embarking on government bond purchases, and in some cases undergoing necessary reforms to eliminate legal restrictions.