##ogenous market - based interest rate path. this path is also subject to change, and therefore prone to some of the same problems as the previous alternative. the benefit of approaches that do not assume a constant interest rate is that they give some sense of the effect of policy on inflation. our current approach is to assume a constant interest rate path in our core model, but the mpc is provided with alternative forecasts based on a market - based interest rate path. furthermore, we have developed a general equilibrium model, which generates an endogenous interest rate path, and the results are also presented to the mpc at each meeting. however, only the forecasts of our core model are published. at this stage, we continue with the practice of assuming an unchanged path, and providing qualitative guidance to the market. this includes specifying the risks to the forecasts, and signalling, when appropriate, our view of the interest rate cycle. it is important to emphasise that any signal, whether quantitative or qualitative, should not be seen as an unconditional commitment to specific actions. the use of a non - constant interest rate assumption remains a subject of discussion in many central banks, and we will continue to work on the utility of moving to such an approach. our forecasts are continually changing, at times marginally, at other times more markedly. this should not be surprising : the underlying assumptions often change in unpredictable ways, sometimes significantly, and this requires a change in our assumptions. we also benchmark our forecasts against forecasts of other institutions and analysts, and as seen in the various regular consensus surveys, those forecasts are subject to change as well. once a year, we undertake an assessment of our forecasts, including a comparison of the accuracy of our forecasts relative to those of financial market analysts. generally our forecasts have compared favourably on this basis, and the results are published once a year in a box in the monetary policy review. our inflation forecasts this year have been subject to quite significant changes, mainly due to changing assumptions of some of the underlying variables, for example, our inflation forecast for 2015 changed from 3, 8 per cent in january, to 4, 8 per cent in march. factors that were central to these revisions included the unexpected increase in the road accident fund levy in the petrol price ; changes in the international oil price ; and the impact of the drought on spot prices of maize and wheat and their possible implications for food prices

after the breakout of the asian financial crisis, responding to the appeal of the neighboring countries and international institutions, china significantly narrowed the floating band of the rmb exchange rate and undertook not to devaluate the rmb, thus contributing importantly to the regional economic and financial stability. what china pursued at that time was a managed floating exchange rate within a significantly narrowed band instead of a fixed exchange rate. during the past year, there have been much debates and discussions on the rmb exchange rate, with substantial different views from some of the world ’ s famous economists. some said that the rmb should be revaluated, while some believed that the rmb exchange rate should be kept stable. i would like to emphasize two points. first, with active participation in the global economic activities and close integration into the world economy, china has provided more and more low - cost and high - quality products to the international markets. this has not been achieved by the adjustment of rmb exchange rate. instead, it has been benefited from china ’ s huge labor force with low cost and improving skills. also, the problems of trade deficit and unemployment in some countries cannot be resolved by the revaluation of rmb. chinese government does not seek to maintain trade surplus, but hopes to keep a balanced current account. export expansion will inevitably result in the increase of import, thus creating opportunities for other countries to increase their export. trade partners should not blame each other for the adverse impact of others ’ products on their domestic industries. instead, they should actively participate in the international division of labor and fully exploit their comparative advantages. second, a stable and growing chinese economy will benefit the stability and development of the world economy. last year, with rapid growth of export, china ’ s import also expanded rapidly. import growth was 39. 9 percent for the whole year. in particular, import from eu, united states and canada grew by 37. 7 percent, 24. 3 percent and 20. 6 percent respectively. import growth accelerated to 42. 4 percent in the first four months of this year, 10. 5 percentage points higher than the growth of export, resulting in a trade deficit of over usd10 billion. import from eu, united states and canada in the first four months grew by 33. 7 percent, 41. 5 percent and 60. 1 percent respectively. the growth of the chinese economy has contributed importantly to the recent world economic recovery. any improper change in the rmb exchange rate policy may create new uncertainties