External observers sometimes criticise the complexity of the Eurosystem’s monetary policy strategy and argue in particular that the monetary pillar or analysis does not provide any useful information for our monetary policy decision. It is considered by some as superfluous, confusing if not as an obstacle to transparency. To give money an important role in its monetary policy analysis and strategy is however quite a natural thing for a central bank geared towards price stability to do, as inflation is “ultimately always and everywhere a monetary phenomenon”, to quote again Milton Friedman. It is worth mentioning that, in our set-up, with a clear medium-term focus, the Eurosystem does not need or have to react mechanically to short-term deviations of monetary growth from the reference value. Instead, monetary developments, i.e. both the developments of the components of M3 and of its counterparts, are analysed very carefully in order to examine and extract their information content for future inflation. *  *  *  PART 2: The achievements of the Eurosystem’s monetary policy What preliminary assessment can we make of the first six years of the single monetary policy? I would like to underline the following points, considering successively price stability, macroeconomic stability and convergence, monetary stance and predictability. 1.
Mr Latter gives an overview of the current monetary policy stance of Hong Kong Address by Mr Tony Latter, a Deputy Chief Executive of the Hong Kong Monetary Authority, at the CLSA Investors’ Forum in Hong Kong on 17 May 1999. I should like to say a few words about the present stance of monetary policy in Hong Kong and its relation to the broader state of the economy. Hong Kong has a fixed exchange rate against the US dollar. The pros and cons continue to be a focus of debate in some quarters, but I don’t intend to dig over that ground yet again today. Suffice it to say that over the past fifteen years Hong Kong has enjoyed, on balance, remarkable prosperity. I happen to think that the visible and trusted monetary discipline of the exchange rate link has been a decisive contributory factor to that prosperity. Of course, one cannot deny that there is some association between the strength of the exchange rate and the level of interest rates on the one hand, and the current recession on the other, but I would caution against adopting too short-term a horizon when drawing conclusions, and I would also suggest that some of the adjustment which we have experienced - for example in property prices - was both necessary and somewhat overdue.