The events of the past two years have already generated farreaching reflections on this issue. 11 Let me mention three avenues. First, the crisis has clearly demonstrated that the economic costs of the unravelling of imbalances can be overwhelming, notwithstanding extraordinary policy action – involving both monetary and fiscal policies.
On Tuesday, the Bank raised its key policy interest rate by one-quarter of one percentage point to 4 1/2 per cent, and we said that some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term. Paul and I would now be happy to take your questions. BIS Review 81/2007  1