the fed has been communicating for some time already. financial market expectations, however, are split between one group foreseeing cuts in the policy rate and another that now foresees rises. the main source of uncertainty originates in the future course of growth and inflation. the second quarter should feature a strong increase in measured growth, but future growth is still a question mark. about the euro zone, the market anticipates that, in order to hold inflation around the target – annual inflation below but close to 2 % – the ecb will need to raise the policy rate a couple of times during the next 12 months by 25 basis points each. in the case of japan, markets also project two rises in the policy rate over the next 12 months. on the other hand, long term interest rates are on the rise in industrial economies, mainly reflecting increased real rates rather than an increase in inflation expectation or of duration premiums. the increases in long - term interest rates may be indicating better growth prospects in the u. s. now that a soft landing is more likely. however, overall global financial conditions are very accommodating, with risks premium that, although beginning to rise, are very close to their record lows. this, despite the flight to quality phenomenon observed in the past several weeks as a result of perceived risk increase because of the market status of low - quality mortgage loans in the u. s. in any case, the levels of market volatility in emerging economies are significantly smaller than they have been in earlier episodes. the dollar has depreciated against the currencies of industrial economies, responding to the evolution of the business cycle. in the past few days, this has been aggravated by concern about how the u. s. housing market situation will unfold. the chilean peso, similarly to currencies in the rest of emerging economies, has also appreciated against the u. s. dollar due to weakness of the latter. exporting or import - substituting sectors that are selling their produce at a dollar price not too different from the price they were getting towards the end of 2001, have possibly endured a large loss of profitability. this is directly associated with the multilateral depreciation of somewhat more than 40 % suffered by the dollar in the world since then. in connection with the expansionary cycle of the world economy, and also with the depreciated dollar, prices of copper, oil and derivatives – especially gasoline – are picking up

are being bailed out by other, much - stronger, partners. it is not clear whether any african countries are either prepared, or indeed able, to bail out their peers in case they confront similar difficulties. a fiscal union and a transfer union cannot be far behind monetary union. we must therefore proceed cautiously. we should not rush into a monetary union. financial integration can very well take place without monetary union in the first instance. limiting our sights to regional financial integration, does not imply any lack of ambition. it does bring many benefits for africa. first, it would provide incentives for domestic financial reforms. second, it would increase the scale of operations. third, it would spur competition. fourth, it would increase fdi inflows. and it would enable african systems to become regional, and ultimately global, players in financial markets. but, to achieve regional financial integration, there are certain conditions that must be met and a key requirement is macroeconomic stability. and this is a pretty tall order, if you take into account the fact that african economies are so vastly different on so many counts. there are problematic asymmetries ranging from production structures to institutional effectiveness – such as democratic accountability, the incidence of corruption, and government efficiency. all these contribute to major disparities in economic performance, including public finance, and dependence, public debt, balance of payments performance, inflation, and growth. between 2000 and 2007, annual growth in sub - saharan africa was around 6. 5 percent – the highest rate in more than 30 years. this was accompanied by low or moderate inflation and growing macroeconomic stability. then the region was hit by two global economic shocks, the sharp increases in food and energy prices of late 2007 and early 2008, and the onset of the recession later in 2008. the crisis came at a time when subsaharan africa was in a much better shape than it had ever been before, and was resolutely heading for higher growth and faster poverty reduction. although, at the beginning, the effects of the crisis were not felt, given the limited integration of the african financial system with the global financial system, their second round impacted negatively on macroeconomic convergence and regional financial integration efforts. this led many to argue that the process of regional financial integration should be delayed or put on hold while awaiting better times. this view has been reinforced by the recent geopolitical tensions in the north african region, which has added grist to the mill of the confirmed africa - sk