occasions. it also issued two statements when it had not moved rates. over the past two years the committee changed rates seven times, accompanied by six statements, with no statements when rates were left unchanged. the purpose of a press statement is to explain a decision reached, by definition by a majority of the committee. because it is brief it cannot do justice to the richness of the discussion at the committee, and the balance of views is not represented. hence the committee has come to the view that, by and large, it is better to wait until the publication of the minutes when a fuller view of issues and views can be provided. that is not to say that press statements will not appear in future, but to stress that their purpose is limited to explaining a decision that might be unexpected, irrespective of whether that is a change or no change in rates. on the whole, the minutes have been successful in creating a wider understanding of the issues discussed by the mpc, and have a devoted, if small, following. the inflation report, which pre - dates the mpc, has a broader objective in setting out a comprehensive view of the current state of the economy, and describing the outlook for inflation in terms of a forecast over a two - year horizon. the committee puts great weight on explaining the forecast in terms of probabilities. hence it has adopted the famous coloured fan charts for its forecasts for both growth and inflation. but there remains some confusion about the role of the forecast. with the advent of the mpc, the tensions between explaining nine individual views and presenting a coherent account of the committee ’ s view of the economy have complicated the production of the forecast. the inflation report now contains an explicit description of differences of view among the committee in respect of both the central projection and the risks to the forecast, as well as the “ best collective judgment ”, or majority view, of the outlook. but the main focus of the inflation report is to present a collective view. to publish nine individual fan charts would hardly increase transparency, and the differences of judgment have to date been sufficiently small that it would be difficult for commentators to observe significant differences among those charts. this tension between the need to explain the diversity of members ’ views, and the need to provide a clear rationale for the single decision, suggests that the committee may need to explore further ways of putting across its collective view. it should be clear that there are both benefits and costs to a group decision - making

timothy f geithner : policy implications of global imbalances remarks by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the financial imbalances conference at chatham house, london, 23 january 2006. * * * good morning. let me first thank the organizers of this conference for inviting me to speak to you today. over the next two days you will focus on the substantial financial imbalances that characterize the world economy today. the size and duration of these imbalances, perhaps the most visible of which is the u. s. current account deficit, present challenges — and risks — for the world economy. understanding the forces behind the international capital flows and the associated gaps between saving and investment within countries that led to these imbalances is of crucial importance to economic policymakers as they struggle to consider the implications of the imbalances on future economic growth. you have brought together an excellent group of people to explore these issues. you meet in the context of some remarkable developments in the world economy. i thought i would begin by touching on some that bear most directly on the subject of your conference. naturally, as a central banker, i ’ ll begin by observing that over the past two decades, most of the world has experienced a substantial fall in inflation. during this period, the rate of inflation in the united states fell to levels broadly consistent with most definitions of price stability, and inflation expectations at longer horizons imply confidence that these gains will also prove durable. these gains were matched in many economies around the world, the result not just of the now widespread practice of having a central bank with instrument independence commit to an implicit or explicit goal of price stability, but also of course of the effects of global economic integration on competition and labor costs. productivity growth in the united states has continued at impressively strong levels, adding to confidence that the acceleration of the last decade will prove durable. it is not difficult to imagine a situation in which the driving forces behind u. s. productivity growth eventually manifest themselves in other large mature economies. so far, however, this positive productivity shock has not been more generalized, and this has some implications for the central topic of this conference. alongside the continuation of the u. s. expansion, global economic activity has strengthened, and the pattern of global growth has become somewhat more balanced. private investment spending is growing at respectable rates in the united states and strengthening in much of the world economy. although there