The key challenge is to conduct monetary policy so as to ensure that the additional resources provided by rising foreign capital inflows do not lead to inflationary pressures or to asset price bubbles. As economic conditions improve and we enter another phase of the business cycle, policy imperatives come into the fore.
The challenge is to address the inherent procyclicality of the financial system by strengthening the macro-prudential framework for monetary policy. The long-term commitment to price and financial stability imposes the need to require better risk management within the financial system.