4 It has also been found that the region’s resilience to capital outflows is related to a high level of financial integration and the presence of foreign banks. 5 On the other hand, other observers have argued that financial stress originating in EU parent banks may have been transmitted to the CESEE region during the early stages of the crisis.
This reflects a price-level adjustment related to increased competitive pressures in the retail sector stemming from the level of the Canadian dollar, as well as the recent reduction in the GST. Excluding the impact of the GST reduction, total CPI inflation is projected to average close to the 2 per cent target throughout 2008 and 2009.