Rising commodity prices are an indicator of strengthening demand around the globe. BIS central bankers’ speeches  3    Higher energy prices likely to boost overall inflation in the near term. Whether energy and commodity prices raise inflationary levels for the medium term depends on the persistence of the commodity price rises.   Because commodity price changes have shown less persistence over the last 20 or more years, economists have seen little evidence of pass-through of higher commodity prices into underlying inflation (Chart 39). In the past, sustained rising prices for energy and commodities have been tempered over time by business and household adopting more energy-efficient practices, as well as investment in and adoption of substitute sources. Sixth, what does the market expect the Federal Reserve to do in the near-term? The last statement of the Federal Open Market Committee said:   The Committee…continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.   Current market expectations, inferred from the federal funds (overnight interest rate) futures curve, are that:      The Fed will purchase the full $ billion of Treasury securities by mid 2011.   The Fed will begin to raise the federal funds rate in the second half of 2011 (Chart 41). The Committee has stressed that policy is conditional on the performance of the economy.
The matters of economic policy that are up for EU discussions are also more specific than before. How is economic policy to be formulated? How can the labour market be made to function better? At the European Central Bank we have missed the train on which the participating central banks designed their monetary policy strategy and decided how the functions of the system of central banks are to be performed. If we join the monetary union in the future, influencing the procedures of the ECB and the formation of monetary policy will be more difficult. In the economic domain the European Union is also increasingly tending to establish joint European positions, for example on such matters as the crises in Russia and Brazil, the role of the IMF, etc. Here, too, I consider we are in a formative phase. Guidelines are now being drawn up for how Europe is to be represented on international bodies and in the work of developing a new international financial structure. The questions include the future status of the G7, G10, G33 and other informal groups. In these contexts we are now becoming rather isolated. Conclusion Now for a brief summary and some conclusions. EMU is a part of the effort that has been in progress for more than five decades to bring the countries of Europe closer together. Today the monetary union is perhaps the most important EU project and as a member of the Community we cannot disregard it.