targets of 2 %. the key challenge facing most central banks is to secure a return to low inflation without incurring too large a cost to growth or financial stability. thus far, the disinflation process has taken place in an orderly manner, without dislocations to the functioning of the global economy and financial markets. but continuing to get this balance right will be a challenge, especially if inflation gets stuck at too high a level. there are complex spillover effects from synchronised policy tightening across countries. these effects could help dampen inflation domestically to the extent they reduce imported inflation. but they could also exacerbate inflation if the domestic exchange rate weakens. adding to the complexity is that monetary policy operates with long lags. if policy is tightened at a pace that does not take into account the effects of previous hikes, we risk a deeper economic downturn or financial stresses. but if policy tightening ends prematurely, we risk destabilising price expectations, entrenching inflationary pressures, and eroding central bank credibility. of course, the question of how fast core inflation can return to central banks ’ target bands is contingent not just on monetary policy. the speed of disinflation is subject to three near - term uncertainties : labour market dynamics, china ’ s re - opening, and a surge in food and energy prices. the first uncertainty is labour markets : continued labour market tightness could lead to persistent services inflation, especially in the advanced economies. covid - 19 presented the ultimate supply shock for labour markets across the world, as workers exited the labour force in large numbers. even with the return of most workers post - pandemic, sectoral labour shortages remain severe in many countries, especially in contact - intensive industries such as retail trade, food, hospitality, and manufacturing. with labour markets persistently tight in most advanced economies, nominal wage growth has been robust. there are three possibly structural factors driving tight labour markets and wage pressures. first, workers have been moving away from low - wage services jobs and moving up the occupational ladder, generating worker shortages in these services jobs. second, there has been a significant fall in the number of immigrant or foreign - born workers in the advanced economies, particularly among lower - wage occupations. third, preferences for work relative to non - work activities may have shifted during the pandemic. recent us data show a persistent decline in desired hours worked especially among better - educated workers. it

, protection of human rights, promotion of “ good governance ”, and human development. their efforts are in danger of falling short, however, because their domestic savings rates are still too low to finance the volume of investments needed to boost their rate of growth from approximately 5 percent to over 7 percent, which is not an unrealistic objective ; it could be attained and sustained for a long time if local savings were supplemented by an appropriate mix of public and private foreign support and if a few key conditions were met, notably : • • continued modernization of the framework for private investment ; and improvement in public governance through the total commitment of new governing teams. together with the world bank and bilateral donors, we can make a difference. but a strong political impulsion by the world ’ s leaders and the example of their countries ’ cooperation to development will be of the essence. may their communique demonstrate their vision and leadership in this domain also. the stability of the international monetary system has been on the agenda for more than 20 years of annual summits. the asian crisis has highlighted how disruptive developments in exchange markets can help trigger a crisis. it is in this domain that efforts to strengthen multilateral surveillance over the international monetary system could be particularly fruitful. moreover, the development of the euro into a key international currency could make a major contribution to stability of the overall architecture, provided that close cooperation is established among the monetary authorities of the tripolar system that might take shape. even if it would be premature at this stage to try to elaborate further on how to maximize the positive effects of this major innovation, no doubt the new international monetary equilibrium will have to be kept under review as a key element of the new architecture. from the outset, effective means of coordination will have to be found to avoid excessive misalignments and disruptive corrections. the world is fully justified in expecting a responsible leadership from these major currencies blocs, which should be actively mindful of their global responsibility and resist the temptation of “ benign neglect ”. each of them. lastly, at a time when de facto more and more responsibilities are being given to the international financial institutions, and particularly to the imf, the question of their political accountability will probably be raised with increasing insistence. indeed, this question already arises from time to time, although not always with full awareness of the nature of our institutions and of the powerful checks and balances already enshrined in their articles of agreement. in this context, and