monetary policies are being stretched well beyond the normal parameters and stresses envisaged when policy frameworks were designed and inflation goals were first specified. ii ) questions that central banks are grappling with in a world of unconventional monetary policy and unprecedented monetary accommodation, several questions are on central bankers ’ minds ; questions such as : • what are the risks that global growth will be revised lower? what is the outlook for commodity prices, and especially oil prices? how can the advanced economies the last five years of merchandise trade growth has been the weakest period since the 1980s. between midoctober 2015 and mid - may 2016 g20 economies introduced new trade measures at the fastest pace seen since 2008. ( wto director general ’ s mid - term report on trade developments issues on 25 july 2016 ). countries with policy rates at or below 0. 5 percent now account for around 65 percent of global gdp. around usd13. 4 trillion of bonds carry a negative yield. global foreign exchange market turnover reached an estimated $ us5. 3 trillion a day in 2013, up from $ us3. 8 trillion in 2007 and $ us1. 5 trillion in 1998. global trading in otc interest rate derivatives – mainly swaps and forward rate agreements – increased almost ten - fold between 1998 and 2013 ( from $ us265 billion in 1998 to $ us2. 3 trillion in 2013 ). the notional amounts outstanding in otc derivatives markets ( mainly interest rate contracts ) reached almost $ us700 trillion in 2013, compared with $ us500 trillion in 2007 and under $ us100 trillion in 1998. chen, j, mancini – griffoli, t, and sahay, r ( 2014 ) “ spillovers from united states monetary policy on emerging markets : different this time? ”, imf working paper wp / 14 / 240. bis central bankers ’ speeches achieve the growth rate needed to generate the “ escape velocity ” to ensure a durable recovery and moderate inflationary pressure? ; • how long are the major central banks likely to run a divergent monetary policy stance ( although they have become more similar as the federal reserve has pushed back expectations of interest rate rises )? when might the federal reserve next raise the fed funds rate? ; • has monetary policy reached the limits of its effectiveness in central banks with negative policy rates and large programmes of quantitative easing? how much scope is there for additional monetary accommodation and will this be deployed – especially by large central banks, such as the

, agricultural products, and other globally traded commodities. additionally, the decline in the foreign exchange value of the dollar has boosted some non - commodity import prices and thus contributed to inflation. however, the so - called core rate of inflation – that is, inflation excluding food and energy prices – has edged down recently after firming somewhat late last year. we expect inflation to moderate in coming quarters. that expectation is based, in part, on futures markets ’ indications of a leveling out of prices for oil and other commodities, and it is consistent with our projection that global growth – and thus the demand for commodities – will slow somewhat during this period. and, as i noted, we project an easing of pressures on resource utilization. however, some indicators of inflation expectations have risen, and, overall, uncertainty about the inflation outlook has increased. it will be necessary to continue to monitor inflation developments carefully in the months ahead. * * * i turn now to the federal reserve ’ s policy responses to these financial and economic developments. well - functioning financial markets are essential for the efficacy of monetary policy and, indeed, for economic growth and stability. to improve market liquidity and market functioning, and consistent with its role as the nation ’ s central bank, the federal reserve has supplemented its longstanding discount window by establishing three new facilities for lending to depository institutions and primary dealers. the lending facilities now in place offer depository institutions and primary dealers two complementary alternatives for meeting funding needs. one pair of facilities – the discount window for depository institutions and the primary dealer credit facility for primary dealers – offers daily access to variable amounts of funding at the initiative of the borrowing institution. a second pair of facilities – the term auction facility for depository institutions and the term securities lending facility for primary dealers – makes available predetermined aggregate amounts of longer - term funding on pre - announced dates, with the interest rate and the distribution of the awards across institutions being determined by competitive auction. although these facilities operate through depository institutions and primary dealers, they are designed to support the broad financial markets and the economy by facilitating the provision of liquidity by those institutions to their customers and counterparties. the primary dealer credit facility was put in place in the wake of the near - failure of bear stearns, a large investment bank. on march 13, bear stearns advised the federal reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for chapter 11 bankruptcy the next day unless