fuel the momentum of reforms moving forward. with the sustained positive developments in almost all sectors of the economy, the outlook in 2014 remains upbeat. we are optimistic that gdp growth will reach the government ’ s growth target of 6. 5 to 7. 5 percent for the year. we also expect inflation to settle within the target of 3 – 5 percent for 2014. in 2015, the inflation target is lowered to 2 – 4 percent, which is consistent with our desired disinflation path. external sector dynamics will remain favorable, as trade is expected to rebound in light of expected global turnaround while remittances are seen to remain on a steady growth path. let me now go to the second part of my presentation : macroeconomic issues. actual developments and prospects all look and sound like it is all good, doesn ’ t it? yes, so far … all positive trends. but just like any shrewd investor, the bsp is mindful about the pockets of risks that could impinge on the country ’ s economic growth momentum. as they say, “ the trend is your friend until it bends. ” let me focus on three issues : 1. risks to price stability ; 2. impact of the gradual tightening of us monetary policy ; and 3. concerns raised on the rapid growth in domestic liquidity and credit which, nevertheless, remain consistent with fundamentals. the first issue is : what are the risks to price stability? we ’ ve been able to keep inflation within the government ’ s target for 5 consecutive years now. is that a trend we can keep? i know many of you are used to looking at charts and trends. the chart on the right side of the screen is something which you may not be that familiar with. it ’ s called a fan chart. it shows the projected path of inflation and the likely area this can stray about, given certain levels of confidence. inflation is seen to be manageable over the policy horizon, even as the inflation path has somewhat moved higher. the left hand side of the screen lists the potential price risks. potential price pressures are still coming mostly from the supply side, notably potential increases in power rates and higher food prices resulting from an expected bis central bankers ’ speeches el nino episode in the second half of 2014. these factors highlight the continued risk of second - round effects, which are thus far, not yet evident. the downside risks to inflation are associated with the potential growth slowdown in key emerging markets and risk of def

##ibrated so that while we try and limit speculative activity, we do not stifle legitimate inflows to the economy. the use of macroprudential measures has so far been effective. by and large, volatilities in the financial markets have been contained. we can use our enhanced tool kit to ensure that volatility in financial and real asset prices is kept at manageable levels. before i move on to the next slide, i know some of you may have this nagging question – are we in an asset bubble? the indicators, as of now, show that we are not in one – but because it is our job to worry, we are mindful that pressures from excessive market exuberance can lead to a bubble. thus, we have been more closely monitoring the real estate sector ( e. g., through the expanded definition of real estate exposures, stress testing on ree. ) earlier, i had alluded to the phenomenon that when global asset managers move, there is a risk that the retail investor could bear the “ heat ” of the shifts. global asset managers often move in herd – partly because they use the same benchmarks, have similar risk management systems, and are very competitive. also, partly because the retail investor does not necessarily have the same set of information that global asset managers have. the classic dilemma of information asymmetry. hence, the saying “ it is better to be incorrect and be with the herd, than to be correct and be trampled upon by the market. ” in order to help reduce that “ risk ” to the retail investors, the bsp is ardent in pursuing measures to promote further the development of our country ’ s capital market by broadening available investment alternatives for you. amended guidelines on rules governing long - term negotiable certificates of time deposits ( ltnctds ). more liberal rules on issuance and trading of ltncds in an exchange to enhance transparency and price discovery. liberalized the framework for the cross - selling of financial products by banks. allowing banks to use their premises to market and sell the financial products of their related parties under a banking group or a financial conglomerate provides a broader array of financial products using the existing branch network of the banking system. created the environment to encourage availability of derivative products for banks and clients. we continue to enhance the regulatory environment [ e. g., refinement of bis central bankers ’ speeches benchmarks, trading rules ] so that