There is not a great deal that we can do – through monetary policy – directly to affect the supply-side of the economy, the underlying rate of growth that we can hope to sustain. Maintaining a stable monetary environment can certainly help, but that is essentially determined by the ingenuity and skills of our business managers and our workforce, by the whole range of Government policies and importantly too, Mr Chairman, by the imagination, energy and enthusiasm of organisations like your own Yorkshire Forward in developing and putting into effect your Regional Economic Strategy. Our job – as I say – is to keep overall demand in the economy growing broadly in line with supply-side capacity. BIS Review 2/2001  1  So how then are we doing? First on inflation. Since we came out of the last recession, in 1992, retail price inflation (on the Government’s target measure) has averaged 2.7%; it has in fact been marginally below the 2½% target for much of the past two years and was 2.0% in the latest 12 months to December. Short-term interest rates - which went up to 12% (and tentatively even to 15%) before we left the ERM in 1992 have been stable at 6% for the best part of a year. Helped by a decline in inflationary expectations, UK 10 year Government bond yields have fallen to around 4¾% which, apart from a brief period at the beginning of 1999, is the lowest they’ve been for nearly 40 years.
Many senior managers and specialists view their student days as a pivotal time in their lives, so the quality of teaching has a major impact on both economy and administration. Universities make a direct contribution to a country's prosperity by maintaining the necessary capabilities and developing and imparting knowledge that is useful for the economy and society. But their indirect contribution is just as important: Universities must enable their graduates to understand and appreciate the significance of the Swiss model for success. This model is based on the pillars of direct democracy, the rule of law, federalism and an awareness of the value of stable institutions. The terms 'markets' and 'competition' are key to understanding basic economic relationships, and are fundamental to ensuring prosperity, as well as to acquiring and applying new scientific knowledge. One of the tasks of a university is to provide its graduates and the general public with a realistic picture of the functioning and importance of markets and competition. Only in this way can the Swiss model for success endure in a world of constant change. 1/1  BIS central bankers' speeches