And retail spending may be slackening, though heavy discounting has clouded the underlying picture. There are clearer signs that the slowdown in the housing market is gathering pace. But the impact of this on consumer spending and ultimately on inflation is highly uncertain. And that is what matters for monetary policy. So growth does now seem to be slowing. But what is less clear is whether the scale of this easing is likely to be broadly what we need to keep inflation on target in the medium term – neither too much nor too little. That’s not just because we don’t know how much slowing is in the pipeline. There are a couple of other important uncertainties too. First, it’s hard to judge the underlying strength of inflationary pressures. When inflation picked up quite sharply last winter, there was a lively debate about how far this reflected strong monetary growth, and how far it was due to the temporary effect of a very big jump in gas and electricity prices. Although inflation has now come down sharply, there is still room for debate about the margin of spare capacity in the economy. Various indicators seem to be telling slightly different stories. On the one hand, overall wage growth seems to have been moderate, by past standards. On the other hand, business surveys of capacity pressures and price expectations remain above average. Second, there is a lot of uncertainty about the risks to inflation, if oil prices do continue at their present levels.
Almost without exception, countries favour criteria for representation that boost their own influence. This is normal when these kind of issues are discussed, but makes progress difficult. In the eyes of many it is Europe that is overrepresented. But it is enough to read the book ‘An Uncertain World', by the former US Secretary of the Treasury Robert Rubin, to realise that it is not Europe that has the real power - it is the United States that essentially calls the shots. This simple example illustrates that there is a big difference between the formal and actual power. Personally, I come to a number of different conclusions from this discussion. The world has changed since the fall of communism and as a consequence of the positive development in a large number of emerging markets. That gives cause to modify countries’ formal influence in the IMF by updating  BIS Review 43/2005  3  quotas to better reflect recent changes in world economy. Such changes should be implemented step by step, and with as broad support as possible. Some argues that the criteria used for determining countries’ influence should be modified. I am not convinced that this is the right way to move forward. There is much symbolism in this issue, which makes it a difficult one. For obvious reasons, it is also difficult to find criteria that balances the need for both borrowing countries and creditors to get reasonable influence, and, at the same time assures that the organisation functions well.