##ary monetary policy has limited the policy tools of central banks. domestic monetary policies of national central banks now face the money flows from international sources which have the potential for making domestic policy less effective. at the same time the wide disparity in interest rates and inflation rates across the globe is narrowing. inflation and monetary policy while central banks in this region have multiple goals of ensuring financial stability, executing monetary policy and helping to develop a stable economic and financial environments, price changes and inflation control have not been a major issue as it has been seen in latin america in the 1970s and 1980s. also, in the developed world inflation targeting is an important objective of central banks. indeed, noted economist ken rogoff and others have pointed out that to the extent that globalisation increases the degree of competition, it can reduce the “ inflationary bias ” or, to put it differently, it can strengthen the anti - inflation credibility of a central bank. by promoting greater price flexibility, competition lowers gains in the short - run to output from an unanticipated inflation. the improved credibility of the central bank ’ s commitment to keep inflation low and stable should, in turn, allow it to deliver better inflation outcomes with fewer short - run costs to what many may consider as political objectives of economic growth and employment. it is however often not quite clear whether the successful control of inflation has been a result of inflation targeting policies or of competition from south east asia, china and india and other developing countries which has driven prices down. however, in the caribbean inflation targeting has not been the major goal of monetary policy up to now, but rather a subsidiary goal. and this has been largely because much of our inflation has been imported. however, high oil prices, the more rapid growth of regional economies in recent years, coupled with expansionary fiscal policies and demand pressures of expansion of some regional economies, has brought the spectre of inflation more to the fore. this has been so more in the rapidly growing economies elsewhere in the caribbean, but countries like ourselves have not been exempt. while the monetary policy levers for control of inflation may be limited, the fact is, inflation control is likely to become a more central part of both policy making than before if oil prices remain high. this however may have less to do with regional central banks adopting inflation targeting as a goal and more with the goal of ensuring that monetary and other policies do not contribute to the imported component of inflation over which we are aware is beyond our control, if

however, human grit – manifesting through collective efforts, intelligent choices, and innovation – will tremendously help us to come out of the present crisis. mahatma gandhi had said, “ … the future depends on what you do today ”. i have presented a bird ’ s eye view of the resolutions that the reserve bank has taken currently to combat this unprecedented situation. i am confident that these will complement the measures undertaken by the government in achieving our policy objectives. along with the tireless efforts of thousands of people and the undying spirit of our populace, i am optimistic that these policy actions will yield desired results. these trying times will only strengthen world ’ s faith in the resilience of our economy. we shall prove this together. thank you. 5 / 6 bis central bankers'speeches 1 walter bagehot ( 1873 ), lombard street : a description of the money market ( new york : charles scribner ’ s sons ) 2 the original quote comes from a play titled the importance of being earnest written by oscar wilde 3 basel committee on banking supervision ( july 2015 ) : guidelines for identifying and dealing with weak banks. 6 / 6 bis central bankers'speeches