51  17  All speeches are available online at www.bankofengland.co.uk/speeches  17  These extraordinary monetary policy measures have been an important factor supporting growth in the UK since the global financial crisis. Without these measures, we estimate the economy would have been around 53  8% smaller and unemployment 4 percentage points higher. Highly accommodative monetary conditions  have helped maintain UK growth at steady, if unspectacular, rates for the past six years. Recent data suggest UK growth continues to be steady, at or around its trend rate of roughly 1.5% per year. At the same time, the labour market has continued to perform strongly. Almost 3 million new jobs have been created over the past six years. The unemployment rate in the UK, at 4.2%, has fallen to its lowest levels in over 40 years. Measures of tightness in the labour market have picked up notably. And the Bank’s estimates suggest little or no slack remains in the economy. Consistent with that, and despite undulations in shorter-run measures, we have seen a steady pick-up in annual rates of wage inflation over the past 18 months, as well as in pay settlements. Private sector regular pay growth has risen from around 2% this time last year to just shy of 3% currently. And average pay settlements of around 2% last year have picked up to around 2.5% this. Surveys of pay and recruitment difficulties, including from the Bank’s Agents, have gone up a gear comparing this year with last.
José De Gregorio: The international financial crisis and its impact on the Chilean economy Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, presented before the Honorable Senate of the Republic, Santiago de Chile, 8 October 2008. *  *  *  Mr. President of the Senate, In response to your invitation to participate in this special session of the Honorable Senate, I would like to share with this audience our vision on the severe financial crisis the world economy is enduring, as well as its implications on our country. The world financial crisis and international growth The financial crisis being experienced by developed countries is the outcome of a period of stability, with abundant liquidity, fast economic growth and an asset price bubble. This combination of aggregate factors yields, as it frequently happens, to a cycle of high credit growth. The problem is that this occurred during an extremely accelerated process of financial innovation in market segments that were poorly or ambiguously regulated – mainly in the US. Low interest rates prompted an intense search for higher returns. Individuals with little or no ability to repay were lent for housing and, to reduce risks, credits were securitized and often taken out of the banks’ balance sheets (i.e. Structured Investment Vehicles and conduits). Money was lent on the assumption that housing prices would continue on the rise, so the mortgage was all that was needed to relax lending standards.