Currently, the rising-CPI item ratio indicates that a persistent increase in prices is widely observed for about 60 percent of the items covered by the core CPI. On medium- to long-term inflation expectations, some market-based indicators – such as the break-even inflation (BEI) and inflation swap rates – declined over the past months, but have become constant or begun to rise recently (Chart 6).
Without wishing to pre-empt the discussions, I would like to highlight briefly the following issues which I think merit particular attention today. First, financial stability is becoming an increasingly important area of responsibility for central banks in East Africa as elsewhere in the world. For the EAC, several trends in recent years have the potential to heighten vulnerability to financial instability.