Despite what has been an unusually accommodative monetary policy by historical standards, the economy has grown at only a 2.1 percent pace over the last four quarters and the Blue Chip consensus forecast only anticipates a modest acceleration to a 2.4 percent rate over the next four quarters. The headwinds retarding recovery are well known. Consumers have been deleveraging in response to the large losses in wealth generated in large part by the collapse in home prices. Housing activity remains depressed for many reasons. These include the large shadow inventory making its way through the foreclosure pipeline, tight underwriting standards for new mortgage origination, and the sharp slowdown in household formation. Although the corporate sector as a whole is now reasonably healthy, there still is a significant constraint on the availability of credit to small business. Fiscal policy has become restrictive as state and local governments have cut expenditures in response to revenue shortfalls; and the uncertainty about how Congress and the Administration will address the 2013 federal “fiscal cliff” is likely to inhibit hiring and investment by business. Global economic growth has slowed as European activity has stagnated and this is capping the demand for U.S. exports. On the brighter side, some of these headwinds appear to be subsiding. Employment growth has picked up somewhat, which should eventually lead to faster household formation and more demand for housing. U.S. banks are healthier so that credit conditions, while still tight, are gradually easing.
Furthermore, at the end of the workshop, participants should be able to: •  Better understand the linkages between macroeconomic programming and strategic planning;  •  Plan steps to be taken with respect to sustainable capacity development for macroeconomic modelling and strategic budgeting at various country levels; and  •  Strengthen the national ownership and leadership in MDG-based planning and implementation process. Mr Chairman, Central banks the world over have a critical role to play in a country’s economic development. As you may all be aware, central banks’ monetary and supervisory policies are implemented to ensure that there is price and financial system stability to promote macroeconomic development. In this regard, monetary policies or any other policy for that matter that are not consistent with the MDGs in the current macroeconomic dispensation should be considered irrelevant to the welfare of our countries. It is for this reason that, without exception, monetary policies in the developing countries have to be MDG-consistent. Price stability The primary objective of most central banks is price stability, which is achieved through the implementation of appropriate monetary policy. High inflation is a major source of concern to any country as it poses a threat to economic development. It is in this context that a central bank’s primary role is to reduce inflation to low and stable levels.