From Sunday, 18 February to Tuesday, 20 February 2007, the Croatian National Bank hosted in Zagreb a regular annual meeting of the BIS Working Party on Monetary Policy in Central and Eastern Europe. The Meeting addressed issues such as monetary, exchange rate and fiscal policies and financial sector and labour market developments. Organised jointly by the BIS and the Croatian National Bank, this event gathered representatives of the BIS, the European Central Bank and central banks of Albania, Austria, Bosnia and Herzegovina, Montenegro, Czech Republic, Estonia, Finland, Latvia, Lithuania, Hungary, Macedonia, the Netherlands, Germany, Poland, Romania, Slovenia, Serbia, Turkey and Croatia.

The participants gave their views on economic growth sustainability in the Central and Eastern Europe and their expectations as regards price stability in the region in 2007, analysed risks arising from foreign borrowing and the effects of capital inflows on local financial markets and the exchange rate. They also examined monetary policy performance in the context of challenges which these policies face, measures taken by central banks in the region to respond to appreciation pressures and the role of interest rates as one of monetary transmission channels. Widening current account deficits were also discussed as well as the reasons for this widening and the risks associated with rising real estate prices. Also on the agenda was the question of the efficacy of prudential measures taken by banking supervisors to maintain financial institutions' stability and to slow down credit growth.

Developments in the local labour markets, including issues such as unemployment, wage growth, productivity and the effects of migration of workers on the labour markets in the countries in the region were also discussed at the Meeting.

During the Meeting, the participants could express their views on fiscal policies in their home countries and their alignment with the Maastricht criteria and the effect that such alignment could have on monetary policy.