a more technical - but still serious - charge to answer. some of those who agree in principle nevertheless argue that we are simply exaggerating the macroeconomic risks. the charge in this case is that we don ’ t in fact need interest rates at their present level, certainly not at any higher level, to maintain macroeconomic stability. that would be a technical judgement on which even the best informed experts might legitimately disagree : in fact as you may have noticed even the members of the monetary policy committee themselves disagree, more often than not, at the margin. now is not the moment for me to launch into that technical debate - just a day before our monthly policymaking meeting. in fact, strictly speaking according to our mpc “ purdah ” rules i ought not to be here at all. but you can find a detailed description of the technical debate, in the minutes of our policy meetings and in the quarterly inflation report, either in our printed publications or on the bank ’ s website. we are among the most transparent central banks anywhere in the world. our debate is informed by a huge input from our very able professional staff both in london and in our agencies throughout the uk, and i ’ d frankly be surprised if you were able to identify any relevant issue that we have not considered in one way or another. indeed i would very much hope that you would let me know if you did. i don ’ t plead ignorance ; i plead intrinsic uncertainty. monetary policy operates with a lag, having its full effects only after about a couple of years. unlike some outside commentators apparently we know we don ’ t have a crystal ball. our judgements are necessarily based upon a very careful assessment of the balance of risks at the time, continuously updated in the light of the constant flow of information of all kinds relevant to that assessment. that ’ s the nature of the process. given that, i would not expect, and you would not reasonably expect me, to be able to demonstrate to you that we have precisely the “ right ” answer at any particular time. but i can promise that if the evidence changes in either direction so too will our assessments. you can of course question our processes, our interpretation of the data or the quality of our analysis - it ’ s there for all to see. but ultimately the proof of the pudding is in the eating, and it is only on average and over time that our policy decisions can sensibly be judged. i ’ d be surprised if those

establish stability elsewhere. stabilisation, of course, is not the end of the story - it is simply the necessary first step. even assuming, as i do, that we are able in fact to contain the immediate financial turmoil, there is bound to be a substantial economic aftershock. domestic economic activity in much of asia will inevitably be subdued, with knock - on effects elsewhere, and major imbalances are likely to emerge in international trading patterns. it is too soon to have any very clear view about the likely scale or duration of these economic effects. the imf, in its interim world economic outlook, based on information available to early december, has tentatively estimated that world gdp growth this year - at 3½ % - might be around 1 % lower than it had expected in the autumn. they expected much of the impact to fall on the asian economies themselves - with forecast growth in the newly industrialised asian economies falling by 2½ %, whereas growth in the g7 countries was expected to be only about ¼ % lower at 2¼ %, with a substantially larger impact on japan. my impression is that, notwithstanding these revisions, most analysts would still see the risks as being quite heavily on the downside. there have been suggestions that the dampening of activity, particularly in this country and in the us, as a result of these developments is welcome insofar as it will help to prevent the re - emergence of inflationary pressures. and that is true - up to a point, my lord copper. it is clearly not desirable that the necessary moderation of demand should be narrowly concentrated on those sectors that are exposed to international competition. and while some of the industrial countries can certainly tolerate significant external deficits for a time, persistent, large deficits would not be sustainable indefinitely. so it is clearly in our own interests as well as theirs that the asian economies recover as rapidly as possible and that we help them towards that end. that represents a difficult international economic and financial agenda for the future which, given the time, is perhaps the subject for another lunchtime occasion. the immediate first step is financial stabilisation in asia, and my message to you today is that we are making progress towards that end.