Christian Noyer: Is inflation set for a comeback? Speech by Mr Christian Noyer, Governor of the Bank of France, at Deutsche Bank, Paris, 19 March 2008. *  *  *  With inflation surging everywhere, it is quite natural to wonder if we could have reached the end of this worldwide era of “great moderation” in both output and price volatility which has characterized Alan Greenspan’s tenure of office. True, one could argue that we are just experiencing one-off shocks in commodity and food prices whose inflationary consequences will wane rapidly thanks to the increased flexibility of our economies. But other possible scenarios are more worrying. Second-round effects could, after years of relatively well contained wages, be triggered by shifts in inflation expectations; through the catching-up of developing economy, the globalisation process could have become inflationary; the ageing of our developed European economy, the necessary fight against global warming could structurally add inflationary pressures,.... and the room for monetary policy decisions could be restricted by the state of the financial and banking system and by the risks of slowdown of growth. I would like to review these issues. In order to avoid any misunderstanding let me immediately make my point. Even if it is clear that inflationary pressures have both increased and changed in their nature, I firmly believe that monetary policy can still ensure price stability, over the medium term.
For those of you who have not been home for a while, cleanskin wine is quality wine that is sold more cheaply because it is unlabeled. So, you are getting something good but you don’t know why because you don’t know what it is. Half an hour ago, the Thai economy this year to many of you was like cleanskin wine. You know the economy is doing better but you don’t know why. BIS Review 50/2004  3  In this brief space of time, I hope I have given you an adequate account of how we at the Bank of Thailand see the Thai economy evolving this year, and hopefully have helped improve your understandings of the economy. As with the cleanskin wine, I will definitely go back for more. I only hope you will do the same by continuing to have confidence in the Thai economy and remain a trusted friend and a dependable partner of Thailand for many many years to come. Thank you. 4  BIS Review 50/2004