carney has pointed out how global influences will shift the phillips curve both lower ( due to the positive supply shock from increased product and labour market integration ) and flatter ( due to integration of global value chains, increased competition and contestability of product and labour markets ). the downward shifts, which will persist as long as integration continues, are disinflationary, pointing to running the domestic economy at tighter spare capacity to meet the inflation target. for the policymaker a flattening of the phillips curve poses a more difficult challenge than under - measurement of labour utilisation or a lowering of the natural rate or of inflation or real pay expectations ( chart 9 ). the latter pose the challenge of judging the timing of policy action right ; excess ( deficient ) demand for labour will drive pay up ( down ) as before as unemployment falls ( rises ). but the point – i. e. the level of unemployment and the rate of growth of pay – at which that will happen is lower. getting the timing of monetary policy right is a formidable challenge for the monetary policy maker. but it is a familiar one. a flatter curve on the other hand, not only affects the timing of the build - up of pay pressure as unemployment falls and hence the timing of policy action. it affects also the sensitivity of pay pressure to unemployment and hence the degree of policy action necessary to bring inflation to target. if the curve is pretty close to flat, monetary policy will have to work very hard to affect domestically generated inflation. as borio, and other, have noted this may bring into question the very ability of central banks to meet their inflation targets. there is no curve the phillips curve framework has been a central part of our thinking about the economy for over 50 years. but it has not always been that way. keynes, after the great depression, posited a world where absent government intervention labour markets did not clear even with lags. in this world unemployment could get stuck at high levels even though wages fell and fiscal policy was therefore required to bring unemployment down. and it is true also that the phillips curve framework has had to be adapted and extended substantially over the past 50 years to maintain its explanatory power in the face of the actual evolution of pay growth and unemployment over the period in a range of countries. carney ( 2017b ) all speeches are available online at www. bankofengland. co. uk / speeches we cannot exclude other possibilities. roger farmer for

consumption and strong investment in the economy. cumulative data for the first 4 months, showed an average growth in new lending by banks of above 60 percent over the last 5 years. in fact, this masks much higher 3 - digit growth rates in both consumption and investment related lending especially to the wholesale & retail, private individuals, real estate and building and construction sectors. aggregate demand in fiji, as noted in the recent trends in the various partial indicators for consumption and investment, remain positive. on the consumption side, vehicle registrations continued to exhibit strength through the march quarter. improved incomes from low taxes, government financial support and remittance inflows from fijians abroad continue to boost consumer spending. prospects for consumption growth also remain encouraging. the latest rbf retail sales survey showed positive sentiments by retailers for higher sales expected in 2016. this is supported by the number of newly registered members with the fiji national provident fund and the number of job advertisements which have continued to grow. in terms of investment and in line with the strong construction activity expected this year, domestic cement sales are recording double digit growth. investment imports are forecast to bis central bankers ’ speeches pick up as the domestic economy strengthens and the reconstruction efforts post - cyclones continue. the timely implementation of both public and private sector projects is critical to raising our investment levels and strengthening the platform for further growth. foreign direct investment totaled just over $ 700 million in 2015 and is anticipated to rise further this year. in the first four months to april new project registrations with investment fiji from abroad have risen 194 percent in value terms, the bulk being in the tourism and services sectors. in regard to investment, i must admit that in the past fiji had been hit with concerns on the ease of doing business here. a lot of this was to do with excess red tape and the multiple approvals required from multiple authorities, which inevitably took time. while we haven ’ t qute got there yet, it is pleasing to note the recent efforts by government and the relevant authorities to address the issues and turn this around. ladies and gentlemen, the strength and soundness of our financial institutions and markets is an important ingredient for growth in the economy. as such, our reserve bank policies continue to aim at further developing the financial sector to ensure the effective intermediation of funds towards growing priority sectors while maintaining financial stability. the latest quarterly assessment by the reserve bank showed the overall condition of banks trading in fiji remains satisfactory as capital and liquidity positions along with earnings and