terms of trade have improved markedly over the past decade. countries such as china and india are now major players in the world trading system, and the prices of manufactured goods globally have fallen as a result. that has produced changes in the pattern of international trade, and in our own industrial structure. although those changes were, and are, uncomfortable to make, they benefit us all as consumers. the rise in the value of what we can buy with our take - home pay has allowed businesses to recruit from a larger pool of labour without having to raise wages. the other factor is migration. over the past few years, the impact of migration, particularly from the new member countries of the european union, has been substantial. the official data on total net migration are derived from small and incomplete surveys, so we cannot pretend to have an accurate idea of the real extent of migration. but, based on responses to the international passenger survey, net inward migration between 1995 and 2004 was estimated to have been 1. 3million, compared with a rise in the labour force as a whole of 1. 7 million. we do know that the labour force has recently been expanding twice as fast as in the rest of the post - war period. migration on this scale raised the potential growth rate of the uk economy and probably dampened the response of costs and prices to changes in demand. that was the past. what of the future? is there a lesson for the monetary policy committee from the experience since 1992 of stable inflation with large changes in unemployment? i think there is. it is that the mpc, in trying to keep inflation close to our 2 % target, must recognise that movements in demand and employment cannot be considered independently of changes in the structure of the economy. focussing too much on short - run movements in demand may lead it to misjudge the outlook for inflation. it is not possible to form a view about the extent of spare capacity in the economy – the so - called output gap – without explicit judgements on how much the economy is capable of producing. but it is really quite difficult to disentangle movements in the output gap from changes in supply capacity. one economist ’ s output gap is another economist ’ s change in supply potential. that issue has been central to the deliberations of the monetary policy committee in recent months. the current outlook for inflation – and hence interest rates – depends not only on the prospects for demand but also upon whether the changes to the supply capacity of the economy

to implementing reforms related to the eu acquis communautaire. it requires progress in the economic, legal and political domains. twinning projects help achieve exactly that : they assist in building a more democratic and open economy in ukraine. and they are always a two - way street : in these projects, institutions exchange, rather than transfer knowledge, thus broadening the perspective of everyone involved. the same applies to this twinning project for the nbu as well. it is a knowledge - sharing mission that will contribute to ukraine in fulfilling its european aspirations. 1 / 2 bis central bankers'speeches ladies and gentlemen, to paraphrase president reagan, the nbu is a shining city upon a hill whose beacon light guides freedom loving people in ukraine. and i am far from exaggerating. its achievements, professionalism as well as commitment as an independent and transparent central bank, delivering price and financial stability, cannot be overstated. its collaboration with international financial institutions, including the international monetary fund ( imf ), has helped ukraine remain on the path towards a more stable and prosperous future. from reforming the banking sector to undergoing a fundamental internal transformation, the nbu has skilfully navigated through often turbulent waters, gaining credibility in the eyes of partners and observers around the world. therefore, the prestigious central banking transparency award, granted to the nbu in 2019, was indeed well - deserved. the nbu ’ s culture, values and openness, its responsibility and clear communication has helped it achieve a hard - won trust with stakeholders and the general public. today, the nbu continues to establish itself within the international central banking community. i congratulate the nbu for recently becoming a member of the sustainable banking network as well as the network for greening the financial system. it displays the nbu ’ s commitment to building a more sustainable and greener financial system. i can therefore candidly say on behalf of the bank of lithuania that it is an honour and a privilege for us to work with the nbu in this project. i am confident that the twinning project will represent a qualitatively new stage in cooperation between our central banks, bringing about concrete results in the areas that it covers. ladies and gentlemen, i would also like to extend my appreciation to the colleagues leading the project from the narodowy bank polski ( nbp ) – an institution at the very top of the league of central banks. thanks to them the bank