urged to be mifc players and develop malaysia as their regional hub with the potential to have the international currency business operations either through the onshore regulatory framework or under the labuan offshore structure. the success of mifc will depend on the collaborative efforts of the financial regulators, the delivery system, the industry players and the supporting professionals. in meeting the mifc objectives, we encourage the exploitation of this new growth area. at the onset, it is also emphasized that an equally important part of this process is having the right people in place with the appropriate skills, having in place the appropriate systems and governance framework to ensure the viability and sustainability of this industry. this morning's dialogue will provide the opportunity to deliberate the issues from the different perspectives and dimensions so that the full potential of the mifc initiatives can be realized. on this note, i wish you a successful dialogue. thank you.

and labor, and financial institutions with significant holdings of nonperforming loans. firms have since restructured their business lines and improved their financial standing, while the rate of banks'nonperforming loans has been reduced from a peak of above 8 percent to below 3 percent. i think it is fair to say that those impediments have now mostly been removed. ii. the price situation on the price front, there is not yet any evidence of inflationary pressure despite steady growth in the economy. the annual rate of change in consumer prices ( excluding fresh food ) stayed negative from fiscal 1998 through 2004. although small but positive in both fiscal 2005 and 2006, the recent figures are again negative, albeit marginally. the absence of inflationary pressure despite steady growth in the economy is one of the distinctive features of the current recovery and also a somewhat puzzling phenomenon. behind it, i believe, lie three changes affecting the formation of prices and wage - setting. the first is the advance of economic globalization. as globalization proceeds, competition with newly industrialized economies that enjoy lower labor costs has been compelling firms to raise productivity and to retain their restrictive stance on labor costs, together with greater exposure to the discipline of the capital market. the second is the influence of deregulation. even nonmanufacturing firms, which are relatively unexposed to the global market, find themselves in a fiercely competitive environment as deregulation and realignment of the industry continues. attitudes on the part of employees could be listed as the third change. employees, having experienced a protracted period when the employment situation was severe, still tend to prefer stable employment to wage increases. taking a rather longer perspective, however, the environment surrounding prices is likely to change gradually. first, with the economy continuing to grow steadily, overall supply and demand conditions are likely to tighten. second, labor market conditions are becoming tighter, as indicated by the decline in the unemployment rate. that will eventually lead to rising wages although this may be gradual. third, surveys of inflation expectations in the private sector suggest moderate rises in prices ahead. given those factors, the annual rate of change in our consumer prices is expected to be around 0 percent in the short run, but gradually to rise in the longer run. iii. the conduct of monetary policy i will now turn to the conduct of monetary policy. in a situation where prices are not rising while the economy is growing steadily, the bank has been adjusting the level of interest rates in a