Where, then, does the exchange rate come in? Apart from its short-run effects via import prices, the exchange rate features in our inflation assessments in two respects. One is that exchange rate movements affect demand in the internationally oriented sector and thereby in time the development of the output gap and ultimately inflation, too. The other is the information which the exchange rate may provide about the development of inflation expectations. While temporary exchange rate fluctuations hardly affect forecasts of inflation one to two years ahead, more lasting tendencies have an overall impact on demand and thereby on the output gap and consequently on the inflation forecast. Adjustment after the inflation era Sweden is one example of the numerous countries that in the 1970s and 1980s systematically aimed for higher growth and employment with the aid of expansionary economic policies, with less regard for the effects on long-term price stability. The outcome was very different from what had been intended. Compared with countries more devoted to stability, for example the Netherlands, Austria and Germany, macroeconomic development in Sweden was poorer in many respects. BIS Review 8/1997  -4-  Inflation in Sweden moved up substantially from the late 1960s onwards, trend growth weakened and the period ended in the early 1990s with a dramatic fall in production, a sharp increase in unemployment and a serious crisis in the financial system. The tendencies in the latter part of the 1980s were not sustainable.
Zeti Akhtar Aziz: New opportunities for growth and development in Islamic financial markets Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the official ceremony for the completion of the Share Subscription Agreement between BIMB Holdings Berhad, Bank Islam Malaysia Berhad, Dubai Financial LLC & Lembaga Tabung Haji, Kuala Lumpur, 16 October 2006. *  *  *  This occasion marks the successful completion of the share subscription agreement between BIMB Holdings Berhad, Bank Islam Malaysia Berhad, Dubai Financial Limited Liability Company (LLC) and Lembaga Tabung Haji. It also sets a new chapter in Bank Islam's drive to chart its future direction in meeting new challenges and in exploiting the new opportunities for growth and development in the Islamic financial markets, both in the domestic and global market place. The participation of such key foreign and local institutions in the new share issuance by Bank Islam Malaysia Berhad signifies an important turning point in the history of Bank Islam which has been the pioneer Islamic bank in Malaysia. The partnership between BIMB Holdings Berhad, Dubai Financial LLC and Lembaga Tabung Haji is significant in several important ways. Firstly, it reflects the confidence and trust that international and domestic investors have in the investment and business climate in Malaysia, and in the Malaysian Islamic financial sector in particular.