Further, the risks to global growth have stepped up. Such risks include most notably those derived from the increase in protectionist policies, from the growing vulnerability of certain countries and agents to a potential further adjustment to global financial conditions, and from the possible heightening of geopolitical tension in certain hotspots. In addition, in the European arena, the outcome of the Brexit and the direction of Italian economic policies are major areas of uncertainty. These developments, along with the increase in global risks, might ultimately affect the growth outlook for the euro area as a whole and, therefore, for the Spanish economy. The economic expansion in the euro area has not been accompanied to date by an acrossthe-board and sustained acceleration in prices (see Chart 4). In this respect, the recent rise in inflation, to 2.2 % in October according to the latest leading indicator published today, is essentially due to the increase in the cost of energy, while the more stable components continue to post low rates of increase. That said, the intensity of job creation and the progressive reduction in the degree of labour market slack in the euro area economies are prompting a gradual rise in wages. Should this continue over time, it would contribute to a sustained pick-up in inflation towards rates closer to the Eurosystem’s medium-term price stability objective, consistent with an inflation rate lower than, but close to, 2%.
William C Dudley: More lessons from the crisis Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Center for Economic Policy Studies (CEPS) Symposium, Princeton, New Jersey, 13 November 2009. *  *  *  Thank you for having me here to speak today. It is a real pleasure to have this opportunity to speak at CEPS again – this is a great forum to talk about policy issues. Tonight I want to discuss some of the challenges we face in making our financial system more robust. We have learned a great deal over the past two years about our financial system and its vulnerabilities. The task ahead is to put these lessons to good use. Our goal must be to make the financial system more resilient to shocks. If we can do that successfully, we should be able to reduce the risk of financial crises. In assessing the causes of this crisis, one clear culprit was the failure of regulators and market participants alike to fully appreciate the strength of the amplifying mechanisms that were built into our financial system. These mechanics exacerbated the boom on the way up and the bust on the way down. Only by better understanding the sources of these damaging dynamics can we construct solutions that will strengthen our financial system and make it more robust. Today, I am going to focus mainly on the extraordinary liquidity events that played out during this crisis.