a formidable challenge. in the current scenario, limitations on the supply response to the momentum of growth are showing up as excess demand pressures. monetary and financial conditions are reflecting these demand supply gaps as well as the onset of a durable pick - up in aggregate spending. banks ’ non - food credit is expanding above 30 per cent for the fourth year in succession, driving up money supply and squeezing overall liquidity. the growth of bank credit has favoured retail lending, particularly housing, real estate, trade transport and professional services and non - banking financial companies – sectors which hitherto were not priced into the credit market. while banks ’ exposures to these new sectors is still relatively small, given the low base, the high rates of growth have raised worries about the quality of these assets and potential nonperformance. default rates in regard to credit card receivables and personal loans have been rising. while buoyant deposit growth has, to an extent, alleviated the financial constraints on banks, credit deposit ratios remain high and investments in gilts have been drawn down to close to the statutory minimum of the slr. these developments are likely to pose challenges to banks in managing liquidity. financial markets have, by and large, remained stable. money markets experienced generally orderly conditions along with spells of tightening of liquidity in november and again from mid - december. during these episodes, contrasting conditions have often been observed when short - term interest rates have firmed up despite laf absorptions but long - term rates have declined in the government securities market. in december, there was an inversion of the yield curve and a narrowing of yield spreads. forward premia have firmed up in november and december across the board in concert with the hardening of short - term interest rates in the domestic money market segments. on the other hand, asset prices, particularly equity prices, have risen to record highs. another significant feature of recent domestic developments is the firming up of inflation through the year. currently hovering above 6 per cent, inflation, in terms of the wholesale price index, is ruling above indicative projections and represents a key concern in the evolving macroeconomic outlook. in terms of consumer prices, inflation is even higher in the range of 7 - 8 per cent. in crafting appropriate monetary policy in these conditions, it is important to undertake a careful assessment of the manner in which inflation is evolving. primary articles, unlike in recent years, have contributed significantly to wpi during 2006 - 07. accounting for

for release on delivery 2 : 45 p. m. edt july 16, 2024 the challenges facing economic measurement and creative solutions remarks by adriana d. kugler member board of governors of the federal reserve system at 21st annual economic measurement seminar, national association for business economics foundation washington, d. c. july 16, 2024 thank you for your generous introduction, ellen. i am delighted to be here with the national association for business economics ( nabe ), and, in particular, i am pleased to be speaking at a conference covering an issue that is close to my heart and on which i have spent many years working : economic measurement. when federal reserve officials tell audiences that their judgments are data dependent, some skeptics perhaps presume that monetary policy is already on a path set in stone. but most in this room likely know what i mean when i talk about data dependence. i am a member of the federal open market committee ( fomc ), which, of course, pursues a dual mandate of maximum employment and stable prices. 1 when i say i am data dependent, that means i am considering the totality of the data — the full range of economic indicators that provide a sense of where the labor market, economic activity, financial conditions, and inflation have been and where they might be going. policymakers must have high - quality and accurate data to understand the economy and set the correct policy. the truth is that it is not just the fed that needs data. consumers, businesses, investors, and others have access to more information than ever before when making decisions. it is incumbent on economists, private - and public - sector data collectors, and others to ensure that available data are carefully collected, accurately measured, and clearly presented, and that data collection and measurement efforts are further enhanced and continue to improve. to be sure, data collection and economic measurement can be challenging, and different types of data face pros and cons, which is why i take an expansive approach to the views expressed here are my own and not necessarily those of my colleagues on the board of governors and the federal open market committee. - 2using data, as i will explain a bit later. but i will begin by highlighting a few challenges to economic measurement. i will then provide some examples of how those challenges might be addressed. i will also provide examples of how nontraditional data generated by the private sector can help provide additional angles from which to view aspects of the economy that may not