To be sure, there have been times when differences of view about the central projection have been too significant to be handled within the ambit of the fan chart and on those (few) occasions the Inflation Report has included material illustrating the minority view. But, as the MPC’s preface to the Inflation Report notes, the fan charts reflect the Committee’s best collective judgement about the most likely paths for output and inflation and the uncertainties surrounding the central projections, while recognising that members may have slightly different views about the underlying assumptions. Forecasts and interest rate decisions How influential is the forecasting process when it comes to the actual business of taking decisions about interest rates? One yardstick might be whether the MPC is more likely to change rates in Inflation Report months. There is no necessary reason why this should be so: information accrues relatively evenly over the year, and the Committee goes through the same decision taking process every month. On the other hand, the MPC might be more likely to change rates after a systematic and full review of the inflation outlook, rather than in response to the news on the month. On this argument, ready-reckoners may give a rough indication of what the impact of new data may be, but they are no substitute for a full analysis. So in non-Inflation Report months the MPC may sometimes decide to ‘wait-and-see’ – to postpone a possible interest rate change until more evidence has accumulated.

This perception is not true. In this competitive landscape, it would be detrimental for players to be short-sighted and to dismiss this class of business as unworthy. With the right business model, microinsurance/ takaful could become commercially viable, profitable and sustainable. Based on Microfinance Information Exchange Market Data (2009) by CGAP, the data for microfinance providers; profit margin 8.43%, return on assets 1.5% and return on equity 7.27%. Microfinance or microbusiness will be profitable if the pricing is right, the portfolio size appropriate and strong risk management practices are put in place. On its part, the Bank will issue a microinsurance/ takaful regulatory framework to facilitate the provision of commercially sustainable micro products whilst offering protection to consumers. We have held dialogues on this, which I hope would lead to a positive outcome in furthering microinsurance/ takaful as a significant business venture going forward. It is timely for industry players to review relevant methods as well as approaches in repositioning their value propositions to attract this segment of the population. A first major step forward that  BIS central bankers’ speeches  3  could be taken is to collaboratively launch nationwide awareness campaigns to promote the benefits of microinsurance/ takaful to the public. The Bank stands ready to provide appropriate avenues of support in rolling out this agenda. Evolve in tandem with customer’s preferences and assist customers in the decisionmaking process Industry players that can offer guidance to their customers will set the building blocks for developing long-term relationships.