Notwithstanding some more encouraging recent signs, there is still a possibility that continuing imbalance between domestic and external demand will need additional sedation or that it will eventually precipitate a sharp fall in the dollar and US asset prices. But the dollar has come off its recent peak and some of the exuberance may now have gone from equity prices - including some of the froth from the “new economy” sector, so the risks of sharp correction may be less than they were. Elsewhere, in Japan, after a long convalescence, there may now at last be some better prospect of a gradual but self-sustaining recovery in private sector demand. And there has been more substantial evidence in recent months of strengthening domestic demand and output growth across the Eurozone. That fully justified the European Central Bank’s gradual shift away from its earlier accommodating monetary policy stance; it may also have contributed to the beginnings of a recovery of the euro exchange rate towards a more comprehensible level. We are certainly not yet out of the woods - there is a long way to go before anyone can feel confident that we are in fact in sight of a more sustainable balance between the major industrial economies. But I am more hopeful that we are now at least moving in the right direction. And that is encouraging news for the UK. On a macro-economic overview, our own economy remains in pretty good shape.
Eddie George: A snapshot of developments in the global economy  Speech by The Rt Hon Eddie George, Governor of the Bank of England, at the Lord Mayor’s Dinner for Bankers and Merchants of the City of London at the Mansion House, on 15 June 2000. *  *  *  I spoke last year - somewhat hopefully, even optimistically for a central banker - about the still nascent global economic recovery from the Asian crisis and its aftermath. But, more characteristically, I worried about the international imbalances affecting the major industrial countries, and the related imbalance within our own economy. The good news, my Lord Mayor, is that the global recovery has turned out to be rather stronger than we dared to hope a year ago. The world economy is currently growing at around its long-term trend rate - of 4% or rather more - and is expected to continue to grow close to that rate over the next couple of years. Although global inflation has meanwhile so far remained generally subdued, monetary policy in the major industrial countries - which had been directed to stimulus during the period of sharp world economic slowdown - has, to varying degrees, reverted to being less accommodating with the equally sharp recovery.