rent - seeking and portfolio hedging activities. in addition, high and variable inflation impeded growth as it was difficult for economic agents to undertake proper long - term planning. in such an inflationary and consequently unpredictable environment, it was impossible to sustain low interest rates as savers demanded a premium on their resources. main elements of the current economic strategy to reverse the cycle of large fiscal deficits and unsustainable debt, the government embarked on a comprehensive economic transformation programme beginning at the end of 2009 and supported by the international monetary fund and other international development partners. the objective of the programme is to secure long - term macroeconomic stability, thus creating an environment that is conducive to the low interest rates and long - term investment that are critical requirements for sustainable economic growth. the main pillars of the transformation programme are : eliminating the fiscal deficit over a four - year period and institutionalising prudent fiscal practices which will translate into sustained reductions in the bis central bankers ’ speeches debt to gdp ratio ; enhancing financial system stability and creating an enabling business environment. in the main, the government has made a strong start to the programme, achieving most of the quantitative targets under the imf stand - by agreement. this, which includes the extraordinary success of the voluntary jamaica debt exchange ( jdx ) in february last year, contributed to a trend decline in market interest rates. from the time that a programme was agreed with imf staff in december 2009, bank of jamaica ’ s 30 - day signal rate has been reduced from 12. 50 per cent then to 6. 25 per cent now, a fall of 625 basis points. the rate on market - determined 180 - day treasury bills declined even more sharply by 1, 024 basis points from 16. 80 per cent in december 2009 to 6. 56 per cent at the most recent auction last month. interest rates in the private money market and on deposits and loans also fell. the result is a substantially reduced cost of capital which is needed to encourage increased longterm investment and growth. the decline in interest rates is also linked to the positive trends and outlook for inflation. annual inflation declined to 7. 8 per cent in august from 12. 6 per cent a year earlier and is expected to fall further during this fiscal year to settle within the target band of 6. 0 per cent to 8. 0 per cent. for the medium - term, inflation is targeted to continue its fall towards the average inflation rate of our major trading partners. against

forge a consensus on how much inflation is too much and oblige our public administrators to operate within our expectations. if some find an easy inflation hedge at the expense of those on fixed contracts, we all lose in the end because the injustice of it will become intolerable to those at the losing end of events. the burden of fostering a low inflation environment rests not only on the government. as you blast off into your own spheres of endeavour – as you ramp up your productivity and do more in a day using less fuel and less paper – you help to keep costs from continuously rising. productivity improvements are the single most effective way to grow income while keeping prices stable. it thus becomes a business objective, a managerial guidepost and a personal resolution. at the end of the day, your actions, your voices and your advice will be invaluable inputs into the mix that keeps government and central bankers true to their promise and you true to your clients. plan for success this year and rest assured that we will do our part to maintain the integrity of those plans. thank you. bis central bankers ’ speeches