A long-term, credible commitment to meet the inflation target also reduces uncertainty when assessing future income, which ultimately determines the (fundamental) value of various types of asset, such as shares. The larger the risk that one will not receive one’s invested funds plus the desired return on the investment, the greater the compensation one requires for investing/lending one’s money. Compare, for instance, with the situation in Sweden during parts of the 1980s (after deregulation) when the system of tax relief on interest, combined with inflation shocks, meant that in principle one could earn money by borrowing while it cost money to save! The conditions for making wise economic decisions will thus become better when the price stability target has been met. The same reasoning can be applied to wage-setting. During the 1970s and 1980s wage-earners were repeatedly forced to make large demands for nominal wage increases as inflation was “eating up” their purchasing power. Real wage increases were almost non-existent, while nominal wage increases pushed up prices, resulting in recurring cost crises. A low, stable inflation rate provides entirely different conditions for more stable and better developments in real wages. Monetary policy and the stock market As I have the privilege of speaking to a group of shareholders, I would like to take the opportunity to make a small digression into the connection between monetary policy and the stock market. I have already mentioned that a low, stable inflation rate creates good conditions for favourable economic growth and long-term developments in the stock market.
I will leave this for the presentation by Kate Sweetman, the main author of this study. Broadly, the Asian Leadership Index demystifies that attributes leaders in Asia must develop if they are to engage the people they lead. The Asian Leadership Index does not propose a new leadership model. Rather, it identifies a number of areas for behavioural change that are needed based on the attributes that respondents indicated are currently missing in their leaders, reinforced with suggestions on how leaders might move forward with greater influence and impact. In conducting this research, it is hoped that it generates thinking on these leadership issues and contribute towards the development of the new generation of effective leaders in Asia. BIS central bankers’ speeches  1