However, reflecting the progress in economic understanding, our actions are now better informed about the pitfalls associated with relying on nominal interest rates to set policy and the important role played by inflation expectations in gauging the stance of monetary policy. Our appreciation of the importance of expectations has also shaped our increasing transparency about policy actions and their rationale.
In 2011, Brazil overtook the United Kingdom as the sixth-largest economy in the world, and it is probably only a matter of time before it dislodges France from fifth place. And, after that, Brazil will have Germany in its sights. Generally speaking, the past few years have seen the weights in the world economy shifting significantly in favour of the emerging economies.