But there is no more important challenge than keeping inflation and inflation expectations anchored on the target. I have enjoyed the opportunity to look back over the past ten years, but, as the saying continues, the only meeting that matters is the next one. When Eddie George and I sat in the Governor’s office on that sunny Bank Holiday morning in 1997, we knew we had been given an opportunity to change monetary policy for the better. We had to grab it with both hands. That is exactly what the Bank has done. References Blinder, A S (2004), The Quiet Revolution: Central Banking Goes Modern, Yale University Press. Blinder, A S and Morgan, R (2000), “Are two heads better than one? An experimental analysis of group vs individual decision making”, NBER working paper no 7909, September. Goldman Sachs Economic Research (2006), “Should the MPC Have Pre-Announced the Hike?”, UK Economics Analyst, 6, 9. Goodhart, C A E (2007), “Whatever Became of the Monetary Aggregates?”, Peston Lecture at Queen Mary College, London. Hennessy, P (2007), Having It So Good: Britain in the Fifties, Penguin. King, M A (2002a), “The Monetary Policy Committee Five Years On”, Speech to the Society of Business Economists, Bank of England Quarterly Bulletin, Summer 2002. King, M A (2002b), “No Money, No Inflation: The Role of Money in the Economy”, Bank of England Quarterly Bulletin, Summer 2002. King, M A (2004), “Speech at the Eden Project, Cornwall”, http://www.bankofengland.co.uk/publications/speeches/2004/speech229.pdf.
The financing of the state pension systems are of vital importance for the taxpayers’ confidence in the economy. If we have learned anything from recent economic developments, it is that households and firms have become better and better at putting things in context, and to change their behaviour accordingly. When forward-looking taxpayers have realised the obvious - that the pension systems  BIS Review 45/2003  3  sooner or later must be overhauled - it has also affected their behaviour. Because in the end, the taxpayers have to foot the bill when the systems are underfinanced - either by way of higher pension charges or lower benefits. Irrespective of which, uncertainty results in households preferring to save a little extra rather than consume. This could also be one explanation to why saving in many central European countries has remained at a comparatively high level. It is therefore pleasing that steps have now been taken in the three largest euro area economies to reform their pension systems. Even if these reforms are insufficient to secure the government finances in the long term, they are important stepping stones towards healthier economic growth. Tax and benefit systems a key question for the labour supply Income tax and benefit systems are also important for long-term potential growth in a country, particularly in countries with a high tax burden. It is indeed not possible to establish with certainty that a high tax burden in itself would constitute a limitation to growth in the long term.