In Japan, good news comes from the labor market – with unemployment at 3.8%, the lowest rate in eight years – and from private consumption that is waking up after a long period of stagnation. Emerging Asia continues to show high growth rates, led by China and India. In particular, China surprised with an annualized growth rate of 11.9% the second quarter. Growth is fairly widespread with important contributions from retail sales, investment in fixed assets and exports. Despite sharp rises in world prices of foods and fuels, CPI inflation has remained stable in the U.S., the euro zone and Japan. In the U.S., recent indicators show a fall in core inflation and are more consistent with inflation converging to the ceiling of the comfort zone defined by the Fed’s open market committee. In the euro zone, despite 1.9% of annual inflation in the  BIS Review 87/2007  1  past two months, output growing above potential, combined with the closing of output gaps and strong credit growth, there is a higher risk of inflation acceleration, which has led the ECB to continue with its process of monetary policy normalization. In Japan, although inflation is still low, with an expanding economy, the Bank of Japan introduced two rises of 25 basis points each in the policy rate to reduce distortions and vulnerabilities associated to excess liquidity. In China and other emerging economies, inflation is increasing.
In any case those ideas can be implementable only if they do not focus on a single sector, but also recognize the close relationship and inter-linkages among various sectors in the economy. Thank you very much! 2  BIS central bankers’ speeches