price more than $ 80. that move increased headline pce inflation to the 4 percent level for a time, but it has since retreated to around 2 percent ( figure 1 ). monetary policy clearly can do little about the first - round effects of a permanent rise in energy prices, which include both its direct impact on the energy component of overall consumer prices and the pass - through of higher energy costs into prices of non - energy goods and services. but policy does have a critical role to play in determining the secondround effects associated with changes in the underlying trend rate of inflation. such secondround effects are likely to be quite limited as long as the rise in the relative price of energy does not lead to a rise in long - run inflation expectations, as has largely been the case in the recent period ( figure 1 ). however, the stability of expectations rests on the central bank's strong long - term commitment to providing a nominal anchor, which, as i have argued elsewhere ( mishkin, 2007 ), describes the situation in the united states. with such a commitment firmly established, monetary policy then does not need to respond as much to the temporary rise in headline inflation to stabilize inflation over the longer run. under these circumstances, if monetary policy is tightened appreciably in the face of a surge in headline inflation, the policy would likely be excessively tight and lead to an unnecessary decline in employment. because the point about headline inflation is so important, i would like to illustrate it further with simulations of frb / us, the model of the u. s. economy created and maintained by the staff at the federal reserve board. to keep the experiments as clean as possible, i assume that the economy begins at full employment and with both headline and core inflation at desired levels. the economy is then assumed to experience a shock that raises the world price of oil about $ 30 per barrel over two years ; the shock is assumed to slowly dissipate thereafter. in each of two scenarios, a taylor rule is assumed to govern the response of the federal funds rate ; the only difference between the two is that in one scenario the funds rate responds to core pce inflation, while in the other it responds to headline pce inflation. 3 figure 2 illustrates the results of these two scenarios. the federal funds rate jumps higher and faster when the central bank responds to headline inflation rather than to core inflation, as would be expected ( top - left panel ). likewise, responding to headline inflation

fahad almubarak : top achievements of the monetary sector during the past decade speech by h e dr fahad almubarak, governor of the saudi arabian monetary agency, at the national day, riyadh, 25 september 2014. * * * our beloved country is celebrating its 84th national day, which is very dear occasion to all of us. the march of welfare and building continues under the prudent leadership of the kingdom. sama ’ s employees are overwhelmed with happiness on this occasion in light of the achievements of the monetary policy by focusing on the interests of the country and citizens. sama ’ s balanced monetary policy has contributed to strengthening the stability of the national economy during stages of global stress and turbulence. as a result, the credit rating of the kingdom of saudi arabia has been upgraded. fitch upgraded the kingdom ’ s sovereign credit rating to aa from aa - with a stable outlook. over the past ten years, the banking sector witnessed a great development quantitatively and qualitatively. m3 rose by 270 percent to sar 1, 669. 3 billion at the end of july 2014 against an increase of sar 451. 3 billion at the end of july 2004. total bank deposits also went up by 284. 5 percent to sar 1, 520. 6 billion in the same period. total commercial banks ’ claims on the private and public sectors grew by 193. 3 percent to sar 1, 314. 4 billion at the end of july 2014 compared to sar 447. 8 billion at the end of july 2004. all these developments contributed to the growth of the kingdom ’ s economy and enhanced the stability of its financial sector. domestic banks ’ capital adequacy ratio ( basel standard ) stood at 17. 8 percent at the end of the second quarter of 2014, exceeding the prescribed rate of 8 percent. in addition, stress tests conducted periodically by sama on commercial banks showed good results. banking services witnessed further expansion throughout the kingdom. commercial banks ’ branches increased by 53. 8 percent to 1, 862 at the end of july 2014, compared to 1, 211 at the end of july 2004. in recognition of the importance of using latest technological developments in the banking field, sama worked with domestic banks on the introduction of the latest secure banking technology. in this regard, the value of transactions carried out through sarie system picked up to sar 54. 6 trillion in 2013 from sar 8. 1 trillion in 2004. moreover, the total number of