This worrying level of inflation is largely the result of both the direct and indirect effects of past surges in energy and food prices at the global level. Moreover, wage growth has been picking up in recent quarters, at a time when labour productivity growth has decelerated, resulting in sharp increases in unit labour costs. Looking ahead, on the basis of current commodity futures prices, the annual HICP inflation rate is likely to remain well above levels consistent with price stability for quite some time, moderating only gradually during the course of 2009. Consistent with this view, the September ECB staff projections foresee average annual HICP inflation at between 3.4% and 3.6% in 2008, and between 2.3% and 2.9% in 2009. The higher inflation projections for 2008 and 2009 mainly reflect higher energy prices and, to a lesser extent, higher food and services prices than assumed previously. In this context, it is important to recall the conditional nature of the ECB staff projections. They are based on a number of assumptions that are of a purely technical nature and unrelated to policy intentions. In particular, the technical assumptions for short-term interest rates reflect market expectations as at mid-August. Moreover, it should be noted that the projections are based on the assumption that oil and non-oil commodity prices, while remaining at elevated levels, will exhibit greater stability over the projection horizon than has been the case in recent months, in line with prevailing futures prices.
Paul Fisher: Confronting the challenges of tomorrow’s world Speech by Mr Paul Fisher, Executive Director for Insurance Supervision of the Bank of England and Deputy Head of the Prudential Regulation Authority (PRA), at the Economist’s Insurance Summit 2015, London, 3 March 2015. *  *  *  Thank you for inviting me to speak to you today. As many of you will know I have been covering as Executive Director of Insurance, in addition to my responsibilities as Deputy Head of the PRA, since August last year whilst a search was made for a permanent appointment. At long last I will be passing the baton over to Sam Woods at Easter. So this is likely to be my final speech made as Insurance Director. I would like to take the opportunity to offer up some personal observations about the current and prospective state of the insurance industry, as well as comment more generally on the role regulation will play in “confronting the challenges of tomorrow”. The insurance sector, by absorbing and laying off risk, plays a fundamental role in fostering a stable economy. A successful industry is therefore key to achieving the Bank of England’s financial and monetary stability objectives. And as society and its economy evolve, it is vital that the insurance sector also responds to that changing environment. Tomorrow’s world inevitably brings change. Some changes can be forecast, or guessed by extrapolating from what we know today. But there are, inevitably, the unknown unknowns which will help shape the future.