PLATFORM FOR DISCUSSION  EVENT: BIS Meeting of the Working Party on Monetary Policy in Central and Eastern Europe 2њљњљ DATE:  NATIONAL BANK OF THE REPUBLIC OF NORTH MACEDONIA  20-21 February 2020  info@nbrm.mk  LOCATION: Becici, Montenegro  www.nbrm.mk  MONETARY POLICY CONUNDRUM IN DEVELOPED ECONOMIES – IS THE REGION DIFFERENT? Ana Mitreska, NBRNM Ljupka Georgievska FSBRR1, NBRNM Gani Ramadani MPRD2, NBRNM  1 Financial Stability, Banking Regulations and Resolution Department. 2 Monetary Policy and Research Department. 1  Monetary Policy Conundrum in Developed Economies – is the Region Different? Ten years after the global crisis, it is more than certain that the context for monetary policy making has not returned to the pre – crisis “normal”. Central banks, in advanced economies in particular, have deployed unprecedented measures to ensure proper functioning of financial markets, and to provide impetus to the economy. Despite the recent global recovery, uncertainties remain elevated and possible vulnerabilities come to the fore. At the same time, certain macro-economic linkages on which conventional monetary policy making was based on have been challenged. To streamline the matter, we will tackle few important issues, which as monetary policy makers we have been faced with. First, though the monetary accommodation helped the recovery, easy financing conditions might have encouraged excessive risk-taking and building of debt vulnerabilities. Second, inflation rate has been low for long, despite the wage growth in many countries, giving ground to the so called “wage – price puzzle”, and questioning the traditional Phillips curve concept.
This is achieved through the hard work, dedication and ingenuity of our manufacturers, who have seized the opportunity to exploit the synergy between Hong Kong and the Mainland China by relocating the land- and labour-intensive processes north of Hong Kong while retaining the servicing and supporting base in Hong Kong. 8. Finally, I would like to close by echoing what Mr. C.H. Tung said in Vancouver during the APEC meeting. Hong Kong, given its sound fundamentals, robust monetary and banking systems, huge foreign reserves, flexibility and resilience in coping with external shocks, would be the first economy to rebound after this episode. We should have confidence that, while in the short run the markets may become more volatile or they may overshoot from time to time and there may be pain involved during the adjustment process, economic fundamentals should prevail in the end. We should be confident that, as we have done on so many occasions in the past, we shall be able to overcome this difficult period and emerge as a stronger and more competitive financial and servicing centre in Asia. We have done it before and we can surely do it again. BIS Review 116/1997