So, before March 25, the Federal Reserve’s posture was one of “watchful waiting,” but with an asymmetric directive, based on the judgment that the risks were weighted toward higher inflation. In March, my view was that there was sufficient momentum in growth to justify a forecast that utilization rates would rise materially further, in the absence of a change in policy.
Therefore I argued in a number of speeches last year that it is important that the Islamic financial industry learns lessons from the crisis and that it amends its business practices accordingly. Recent developments have provided more support for this conclusion. In the past twelve months we have seen the first defaults by issuers of Sukuk.