Few things are  2  BIS Review 40/2002  certain in life - the distance between Scylla and Charybdis has not widened, but it is a more comforting prospect than I was able to offer you last year. My Lord Mayor, I’m not sure how much comfort that message will bring to the Merchants and Bankers of the City of London here this evening. But they will certainly have enjoyed, as I have, your very generous hospitality, which has been in the very best tradition of the occasion. And on behalf of all your guests I thank you - and the Lady Mayoress - for that. I thank you, too, for your sterling efforts throughout your mayoralty - in support of the City, in its civic affairs, in its business activity, and in its increasing engagement with our neighbouring communities. And I thank you not least for the role that you have played - on behalf of all of us - in helping to celebrate so splendidly Her Majesty’s Golden Jubilee. I invite all your guests, now, to rise and join me in a toast to your good health. My Lords, Ladies and Gentlemen, the Toast is: “The Lord Mayor and Lady Mayoress - Michael and Sally Oliver”  BIS Review 40/2002  3
  Hours worked, closely tied to overall economic activity, and personal income excluding transfers (Charts 4–5) illustrate both the depth of the economic decline and the highly unusual nature of the recovery so far compared with all others in the post-World War II period.   The unemployment rate has declined, but to a large extent this reflects the decline of the labor force participation rate (Chart 6). Ranges of estimates of unemployment including discouraged workers run as high as the high teens.   Had the participation rate remained at its business cycle peak level, the unemployment rate would be about 10.5 percent.   Core inflation (excluding energy and food prices) has declined to a very low level, well below the range of 1 percent to 2 percent that market participants have associated with the Fed’s desired, “mandate consistent” range. Low rates of core inflation are of concern because economic research suggests that this is an important indicator of long-term trend headline inflation (Chart 7).   Economic history also suggests that recoveries from financial crisis and recession are fragile. Indeed, one disappointment in 2010 was that an initially strong recovery weakened considerably in the second quarter, in part due to renewed concerns about financial fragility in the wake of the sovereign debt concerns in parts of Europe. The recovery remained restrained, eventually prompting the Federal Reserve in November to embark on a second round of large-scale asset purchases, often called quantitative easing.