consolidation will continue. the government has shown its commitment to this process by continuing to adjust expenditure where the revenues fall below budget. additionally, the government has demonstrated its commitment to fiscal transformation with the commencement of the phased implementation of the central treasury management system, which will result in more efficient management of public sector finances. the process to divest the government of public bodies that are a drag on the budget has achieved major milestones and is continuing. with these developments, there is going to be a continuing decline in the fiscal deficit and the debt ratios. lower demand for financing from the domestic market by the government will continue to result in more and more resources being available for private sector credit. repeated success in meeting the quantitative targets under the imf - sba has led to increasing confidence about the prospects for the economy. we saw this in the strong preference for jamaica dollar assets during the fiscal year and the steady appreciation in the exchange rate. the bank ended 2010 with strong net international reserves ( “ nir ” ) of bis central bankers ’ speeches us $ 2. 17 billion, an increase of us $ 442. 1 million for the year. gross international reserves, at us $ 2. 98 billion, represented 23. 7 weeks of projected goods and services imports. in the context of the relatively stable market conditions during the year, the bank lowered the interest rate on its 30 - day certificate of deposit by 375 basis points to 6. 75 per cent by endfebruary 2011. in addition, the bank increased the pool of loanable funds in the system by reducing the cash reserve requirement for both jamaica dollar and foreign currency deposits. market - determined interest rates also trended down during the year at a faster pace than the central bank ’ s policy rate. despite emerging challenges from rising international commodity prices, headline inflation continued its progress towards the achievement of the target for the fiscal year of 7. 5 to 9. 5 per cent. statin released its inflation report for february ten days ago although this may come as a surprise to you as the news media appear to have concluded that the results in the report are not sufficiently newsworthy to be reported in a timely manner. interestingly, i read a statement in one of today ’ s newspapers that food prices rose by 25 per cent last year in an environment where the minimum wage is j $ 4, 500 per week. well, not exactly. in the same inflation report for february that was released by statin ten days ago, prices in the food category

further out. the mortgage interest rate is projected to decline to just above 4 percent. even though there is substantial uncertainty about the future level of the neutral rate of interest, we must be prepared for a higher interest rate level than we had been accustomed to over the past decade. 2 / 3 bis - central bankers'speeches chart : inflation will slow and unemployment will increase somewhat given the current policy rate path, we expect inflation to slow further and approach 2 percent towards the end of 2027. growth in the norwegian economy is expected to pick up slightly in the years ahead, but we expect some increase in unemployment. the decline in some business sectors, especially the construction industry, may continue for a while longer before conditions turn around. many consumers have less money to spend, which has made it difficult for some people to make ends meet. interest expenses are set to remain high, but wages are expected to rise faster than prices. most households will then see their spending power increase and a debt burden that will be easier to bear. the economy may move on a different path than we now envisage, and the policy rate path may then also change. the policy rate is now likely sufficiently high to bring inflation back to target within a reasonable time horizon. but we cannot say this with certainty. if capacity utilisation increases or the krone depreciates, wage and price inflation could remain elevated for longer. in that case, there may be a need to raise the policy rate. on the other hand, if unemployment rises more than expected or price inflation declines more rapidly, the policy rate may be lowered earlier than we now envisage. inflation has come down. this is good news. but we must keep in mind that the last mile of disinflation may take time. to maintain confidence in the inflation target, we must do our job and bring inflation back to the 2 percent target. we will then be able to reap the benefits of our efforts. 3 / 3 bis - central bankers'speeches