Thank you for the invitation to speak today, which gives me a chance to continue my support for the Society of Professional Economists, beyond my very limited official duties for the society. Thank you also to Bloomberg for their support for the SPE, through hosting today’s conference on future-proofing the world economy.
In going back to the future, I’m going to review UK economic developments over the last twelve months, compared with the forecasts the Monetary Policy Committee (MPC) has produced over that period. I’ll then set out how my thinking on the role played by the forecasts has evolved in the context of the November Monetary Policy Report (MPR) forecasts published a fortnight ago. I will finish with some personal reflections on the implications of the outlook for monetary policy and why the best thing the MPC can contribute to future-proofing the UK economy is to get inflation back to the 2 per cent target sustainably in the medium term.
This speech is a sequel of sorts to one I gave a year ago. Then my focus was on the uncertainty created by the major shocks the UK economy had experienced. Uncertainty remains heightened both from the ongoing consequences of these earlier shocks, including what they imply about the future balance of demand and supply in the economy and the persistence of inflationary pressures. The last year has also seen its fair share of shocks, for example stresses in the banking system, but while these have impacted on parts of the financial system their wider macroeconomic implications have so far been limited. Those more recent shocks could still have more significant implications. But as of now I feel more confident than I did a year ago about looking beyond the next few months to the economic and policy outlook further out.