Since the U.S. is still a net importer of petroleum, this development has provided substantial benefits, with our oil import bill down by about a ½ percentage point of GDP. That represents a significant boost to real disposable income for households. The degree to which this energy dividend supports household spending will depend, though, on how much is spent versus saved. While I am relatively optimistic about the growth outlook for 2015, I also must acknowledge that there are some significant downside risks. In particular, the roughly 15 percent appreciation of the exchange value of the dollar since mid-2014 is making U.S. exports more 2  BIS central bankers’ speeches  expensive and imports more competitive. My staff’s analysis concludes that an appreciation of this magnitude would, all else equal, reduce growth of real GDP by about 0.6 percentage point over this year. Some of the recent softness in indicators of manufacturing activity is likely a reflection of this development. Additionally, the decline in energy prices, while helping to support household spending, will adversely impact business investment. The support to growth from rapidly rising U.S. oil production almost certainly will fade due to the oil price decline. Now, with prices sharply lower, U.S. oil exploration and drilling activity is falling off very sharply, and this will undoubtedly exert a meaningful drag on economic activity. Turning to the inflation outlook, the data continue to come in below the FOMC’s objective of a 2 percent annualized rate for the personal consumption expenditures (PCE) deflator.
They have clearly demonstrated their will to take action when necessary. But governments are also intervening to bolster banks’ solvency and soundness. In this context and in order to ensure that national measures for dealing with the crisis are consistent, the international community is taking a collective stand. The G7 plan of action is a major step forward. It sets out clear principles to be applied by the whole international community – in particular the IMF’s International Monetary and Financial Committee – with a view to giving structure to national actions. It expounds the following principles: •  taking decisive action to prevent the failure of financial institutions;  •  taking all necessary steps to unfreeze credit and money markets;  •  ensuring that banks and other major financial intermediaries can raise capital as needed;  •  ensuring that national deposit insurance and guarantee programmes are robust;  •  ensuring accurate valuation and transparent disclosure of assets, as well as consistent implementation of high quality accounting standards. Thanks, in particular, to France’s leading role in discussions, Europe is organising itself.