Weathering the Global Storm: The Benefits of Monetary Policy Reform in the LA5 Countries

Author/Editor: Canales Kriljenko, Jorge Iván ; Jácome, Luis Ignacio ; Alichi, Ali ; de Oliveira Lima, Ivan Luis
Publication Date: December 01, 2010
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: This paper highlights that central banks from Brazil, Chile, Colombia, Mexico, and Peru (the LA5 countries) reaped the benefits of what they sowed in successfully weathering the global crisis. The adoption of far-reaching institutional, policy, and operational reforms during the last two decades enabled central banks to build credibility about their commitment with the objective of price stability. Thus, when the 2007 - 08 supply shock and the financial crisis hit the world, the LA5 central banks reacted swiftly and effectively based on a flexible policy framework and with the support of strong macroeconomic and financial foundations. Building on the experience of the LA5 central banks and complementing with recommendations from the IMF’s technical advice, the paper provides several suggestions for countries seeking to strengthen the effectiveness of monetary policy.
Series: Working Paper No. 10/292
Subject(s): Brazil | Central bank autonomy | Central banks | Chile | Colombia | Cross country analysis | Financial crisis | Global Financial Crisis 2008-2009 | Inflation targeting | Latin America | Mexico | Monetary policy | Peru

Author's Keyword(s): Latin America | monetary policy | inflation targeting
Publication Date: December 01, 2010
Format: Paper
Stock No: WPIEA2010292 Pages: 56
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