concept in practical policymaking. on the other hand, to argue that output gaps are very difficult to measure in real time is not the same as arguing that economic slack does not influence inflation ; indeed, the bulk of the evidence suggests that there is a relationship, albeit one that may be less pronounced than in the past. 7 these observations suggest two useful directions for research : first, more obviously, there is scope to continue the search for measures or indicators of output gaps that provide useful information in real time. second, we need to continue to think through the decision procedures that policymakers should use under conditions of substantial uncertainty about the state of the economy and underlying economic relationships. for example, even if the output gap is poorly measured, by taking appropriate account of measurement uncertainties and combining information about the output gap with information from other sources, we may be able to achieve better policy outcomes than would be possible if we simply ignored noisy output gap measures. of course, similar considerations apply to other types of real - time economic information. inflation itself can pose real - time measurement challenges. we have multiple measures of inflation, each of which reflects different coverage, methods of construction, and seasonality, and each of which is subject to statistical noise arising from sampling, imputation of certain prices, and temporary or special factors affecting certain markets. from these measures and other information, policymakers attempt to infer the " true " underlying rate of inflation. in other words, policymakers must read the incoming data in real time to judge which changes in inflation are likely to be transitory and which may prove more persistent. getting this distinction right has first - order implications for monetary policy : because monetary policy works with a lag, policy should be calibrated based on forecasts of medium - term inflation, which may differ from the current inflation rate. the need to distinguish changes in the inflation trend from temporary movements around that trend has motivated attention to rotemberg and woodford ( 1999 ). orphanides ( 2002 ). for a counterargument, however, see atkeson and ohanian ( 2001 ). various measures of " core, " or underlying, inflation, including measures that exclude certain prices ( such as those of food and energy ), " trimmed mean " measures, and others, but other approaches are certainly worth consideration. 8 further work on the problem of filtering the incoming data so as to obtain better measures of the underlying inflation trend could be of great value to policymakers. the necessity

maucas, which will benefit one and all. last but not least, i thank the bank ’ s board of directors, my two deputy governors and the staff of the bank for their guidance and hard work. thank you. payment systems have always rested at the heart of the banking and financial system. over time, they have evolved from the traditional narrow channel for transferring funds into a broader integrated network for creating additional forms of value. the establishment of networks and systems for retail payments has acted as a catalyst in supporting financial access in developing countries. 4 / 4 bis central bankers'speeches