50 years and leave the next generation with a different and better experience. policy and institutional options for a different future we have on the menu essentially the same set of options that policymakers had post - bretton woods : pegging ( or fixing ) the exchange rate, monetary union, dollarisation and independent central banks. the difference now is that we have had 40years of experience since then and have spent a lot of time and energy in discussing some of them as regional issues. bis central bankers ’ speeches the first three – a fixed peg, a monetary union and dollarisation – all imply relinquishing discretion over monetary policy. they differ in the degree of commitment or reversibility inherent in each regime and, in a sense, what the actual currency units would look like. the answer to the question “ what ’ s in your wallet? ” would tell the world what your choice was. a fixed exchange rate a fixed peg has the appeal of establishing a known and predictable parity for the jamaica dollar against, most likely, the us dollar. it would thus keep the jamaica dollar in your pocket and preserve its nominal external value by fiat. other things being equal, policy would limit the permissible rate of domestic monetary expansion and would thus, in the absence of local supply shocks, tie domestic inflation to that of the united states. given the current strength of the net international reserves and the growing record of exchange rate stability, this might seem to many to be the perfect time to establish an official fixed exchange rate. going back to where we were is not, however, a straightforward move. somewhat akin to the idea of original sin, there is a reputational issue that has been burned into people ’ s psyche – that of perennial uncertainty and the option that the government would continue to have to adjust the parity whenever it deems it necessary. the issue of credibility is stacked against years of experience with expedient adjustments when pressures have arisen and the absence of any statutory or institutional commitment to maintaining the parity. there are other realities. supply shocks are a feature of life in the caribbean, some of which, if they are long - lasting, may require an adjustment to economy - wide prices like the exchange rate. further, exchange controls, which have traditionally been the institutional safeguard to ensure reserve adequacy, would be an anachronism in these times of open borders and financial integration. thus, while the reserves may be sufficient at this time to support exchange rate stability,

cent, exhibited this muting effect. despite the significantly lower than expected outturn of inflation for the first four months of the fiscal year, the bank is maintaining the fy2013 / 14 forecast for inflation to be in the range of 8. 5 per cent to 10. 5 per cent. domestic prices are expected to reflect the impact of higher international commodity prices, particularly crude oil, and the pass - through of the depreciation in the exchange rate. additionally, seasonal increases in the prices of domestic agricultural produce are expected to contribute to inflation for the period. however, although the muting effect may well continue, a cautious assessment of the near term risks suggests that inflation may also end up close to the upper bound of the forecast range for the quarter and the fiscal year. these risks largely relate to the administrative adjustments to transportation costs ( which were recently announced ) and, possibly, adjustments to utility costs as well as higher than expected crude oil prices. adverse weather, in the context of a forecast for an above average hurricane season, also remains an upside risk to the forecast. the existence of weaker than anticipated domestic demand conditions continues to be the main downside risk. real gdp growth real gdp is estimated to have contracted in the june quarter, albeit at a slower rate than in the previous quarter. both the tradable and non - tradable sectors are estimated to have declined in the quarter. the contraction reflected the impact of drought conditions, continued weak domestic demand as well as the slow recovery in the global economy which contributed to lower remittance inflows and low demand for jamaica ’ s goods and services. agriculture, forestry & fishing ; hotels & restaurants and electricity & water supplies were estimated to be the main industries which recorded declines. looking ahead, the bank is projecting that real sector activities will improve in the remaining quarters of the fiscal year. this forecast largely reflects an expected recovery relative to the outturn for the corresponding period of fy2012 / 13 when the performance of the economy was negatively affected by hurricane sandy which was followed by drought conditions and a high level of investor uncertainty related to perceived delays in concluding an agreement with the imf. therefore, the projection for real gdp growth is predicated on improved investor confidence, continued expansion in the global economy and more robust growth in credit to the private sector given the release of resources as a result of reduction in demand from the public sector. against this background, real gdp growth for the september quarter as well as fy20