It is of paramount importance that the rise in HICP inflation does not lead to second-round effects in price and wage-setting behaviour and thereby give rise to broad-based inflationary pressures over the medium term. Inflation expectations must remain firmly anchored in line with the Governing Council’s aim of maintaining inflation rates below, but close to, 2% over the medium term.
I will do so by reviewing the Bank’s risk  BIS Review 21/2008  1  assessments, policy decisions and market operations in 2007 and by examining some policy challenges that we face this year.