2 All three of these reasons – evidence that U.S. monetary policy is currently only moderately accommodative, the fact that U.S. financial conditions have been influenced by economic and financial market developments abroad, and risk management considerations – argue, at the moment, for caution in raising U.S. short-term interest rates. So, directionally, the movement in investor expectations towards a flatter path for U.S. short-term interest rates seems broadly appropriate. That said, to my eye, market expectations derived from futures prices – which price in about one 25 basis point rate hike through the end of 2017 – appear to be too complacent. If the incoming information validates my view of the outlook, then I believe that U.S. monetary policy will likely need to move at a faster pace than implied by futures prices towards a more neutral posture as the labor market tightens further and U.S. inflation rises. Moreover, market expectations may be putting insufficient weight on the possibility that the economy could outperform our expectations, that financial conditions could ease, or that the risks to growth from Brexit and other international developments could fade away. If such events were to occur, this might necessitate a faster pace of adjustment. For these reasons, I think it is premature to rule out further monetary policy tightening this year. As I said before, it depends on the data, broadly defined, and, as we all know, that is not something one can predict with any accuracy.
As some of you may recall, during my presentation in Arusha, I did indicate that our economy had shown some resilience in the midst of the global economic crisis. I am delighted to inform you that following the presentation, we have seen further improvements in macroeconomic indicators with GDP growth for 2009 estimated at 6.3% while inflation edged downwards to 9.9% in December 2009 and 9.6% at end January 2010. The exchange rate of  BIS Review 18/2010  1  the Kwacha against major international currencies has also shown some stability in the recent months. This is no mean achievement and credit must go the Government for providing a stable macroeconomic environment. However, the recent crisis has exposed clear gaps that need to be addressed in order to create wealth and reduce the high levels of poverty in our country. There is need to have innovative solutions to the problems that our economy faces today. These innovative solutions are expected to come from various stakeholders including associations such as yours. For us to make a significant dent on poverty, the economy should record growth rates of 8% and above. This can only be achieved by innovation and competitiveness on the world market. Ladies and Gentlemen, despite the stable macroeconomic environment, we have not reaped full benefits from the international trade arena.