And it is true equally of government intervention in the form of regulation and social protection. But my strong impression is that there is a growing awareness in many countries that policies in all these areas need to take account of potential supply-side effects, with an increasing bias towards structural reforms, in labour, product and capital markets, with a view to increasing employment and reducing distortions that impede efficient resource allocation. Now I do not pretend to you, Mr. Chairman, that the international policy consensus that I describe - particularly on the supply-side - is fully articulated; nor do I claim that it is subscribed to in its detail equally in every IMF member country. But it does represent a substantial evolution in our collective thinking over the past decade or so towards a much more common approach to economic management, which serves as a valuable framework within which countries’ performance can be assessed. The snail may have moved slowly but it has in fact travelled a considerable distance! It has nonetheless still a long way to go. Its progress has been impeded in the past few years by the eruption of a number of financial disturbances - most recently in Asia - which have drawn attention to continuing deficiencies in our approach to economic management; and we spent much of the time last week in Washington discussing what lessons we might learn from those events.
We can expect other events to occur with a greater or lesser degree of probability. Historically, the deviation between actual underlying price inflation and our projections has been within an interval of +/-1 percentage point. When we later report on the implementation of monetary policy, we will place special emphasis on analysing the causes when deviations from the target are more than +/- 1 percentage point. 1  “Box: Effects of a change in interest rates” in Inflation Report 4/2000, Norges Bank. 2  Economic models of the Bank of England, Bank of England (1999). 2  BIS Review 7/2002  Normally, we make projections with a time horizon of about two years. During this period, a number of events will necessitate a revision of the projections. A number of uncertainties will be clarified along the way. New information about how the economy functions may be revealed. As we approach the period for which the projections apply, the uncertainty surrounding the projections will diminish. The chart shows how the projections for the rise in the CPI from 2000 to 2001 have changed from December 1999 to the end of 2001. Through 2000, the estimate was revised upwards by more than 1 percentage point. The most important factor influencing this adjustment was an upward revision of the projections for oil and electricity prices in 2001. We see that from the end of 2000, the deviation of estimated price inflation from actual price inflation, which was 3 per cent, was modest.