And third: I'd like to wish everyone a happy Valentine's Day. As Rihanna sang at the Super Bowl, I hope you all have someone to stand under your umbrella. Inflation Is Still Too High Economic developments over the past three years have been extraordinary. The pandemic contributed to dramatic swings in our economy - and economies around the world-that we are still grappling with today. At the onset, we experienced the deepest but also the shortest-recession in U.S. history, as well as an immediate spike in unemployment, the highest since the Great Depression. Then, along with Russia's war against Ukraine, the pandemic contributed to skyrocketing inflation, which reached 7 percent last June, as measured by the personal consumption expenditures (PCE) price index . That's a level we had not seen for four decades, and one that is well above the FOMC's longer-term goal of 2 percent. High inflation hurts everyone, but it's hardest on those who can least afford essentials like food, housing, and transportation. Persistently high inflation also undermines the ability of our economy to reach its full potential. The Federal Reserve has a dual  1/5  BIS - Central bankers' speeches  mandate, set by Congress, to promote price stability and maximum employment. And price stability is essential for the achievement of maximum employment on a sustained basis. Over the past year, the FOMC has taken strong actions to bring inflation down. Although we have seen some moderation in recent months, the inflation rate remains far too high at 5 percent.

Thus increased, monetary stability has produced tangible and positive effects and contributed decisively to a strong and sustainable growth of the world economy. However, while globalisation and financial integration have decisively contributed to improving overall economic efficiency, experience also suggests that financial asset prices have experienced in some circumstances somewhat erratic developments. The rapid emergence of the "new economy" bubble in 1999 and early 2000- followed by a series of sharp corrections- illustrated the potential of markets for providing funding to the real economy, particularly to the most innovative sectors; but it demonstrated again the tendency of markets to over-react, moving from excessive optimism to disproportionate pessimism, with the ensuing negative consequences for the behaviour of firms and households. Thus financial authorities have been confronted with boom-bust episodes which must be carefully monitored, since they could affect global monetary and financial stability. I would like therefore to consider two issues here: ·  First, some factors encouraging excessively homogeneous market behaviour may hinder a smooth and efficient functioning of the markets, and  BIS Review 54/2001  1  ·  Second, the authorities might reflect on some ways of fostering more diverse behaviour on the markets. Some factors encouraging excessively homogeneous market behaviour may hinder a smooth and efficient functioning of the markets Even though fixed interest rate markets have a tendency to be somewhat contra-cyclical, financial asset price have tended to fluctuate widely and sometimes deviate from economic fundamentals for long periods of time.