Monetary policy with a steady hand
Speech given by
Huw Pill
Chief Economist
The Society of Professional Economists Online Conference 2022
The Challenges of Change
9 February 2022
My thanks to Jack Meaning, Alberto Polo, Rich Harrison, for helpful discussions in the preparation of this
speech. I would also like to thank Andrew Bailey, Lennart Brandt, Ben Broadbent, Alan Castle,
Michael Goldby, Jonathan Haskel, Andrew Hauser, Michael Saunders, Martin Seneca, Fergal Shortall,
Tom Smith, Matthew Swannell and Silvana Tenreyro for their comments. Opinions (and all remaining errors
and omissions) are my own.
Good afternoon everyone.
It is a great pleasure and honour to speak at today's Society of Professional
Economists conference. Thanks
to George Buckley and his fellow organisers for the invitation to participate.
Last week's MPC decision
Let me start with last week's MPC decision.
As you all know, the MPC decided to raise Bank Rate by 25bp to 0.5%. The Committee also agreed to
commence the unwind of gilt holdings accumulated through quantitative easing (by ending re-investment of
maturing bonds), as well as announce an intended unwind of the corporate bond portfolio.1
This further withdrawal of the monetary policy accommodation introduced at the outset of the pandemic was
motivated by a forecast with three important and inter-related elements, which I will address in turn.
First, the evolution of international energy and goods prices, which continue to drive headline inflation
developments in the UK. These have repeatedly surprised to the upside in both magnitude and persistence
over the past year, putting painful pressure on the cost of living and placing the MPC in the current, very
uncomfortable position of forecasting headline CPI inflation to peak at over 7% in April.
For a net importer of energy and goods, these developments represent a deterioration of the terms of trade.2
This is an adverse real shock, with adverse real consequences. Higher international energy and goods
prices unavoidably weigh on UK real national income.
But it is a real shock with substantial nominal implications. Higher energy and core goods prices account for
the bulk of the inflation target overshoot, and a large part of the successive upside surprises we have seen in
inflation outturns.
This lays bare that we are in difficult The driver of higher inflation is
trade-off territory for monetary policy.
also a driver of lower real income and demand in the later years of our forecast, and thus higher
No 'divine coincidence'
unemployment. here.3 Bringing down inflation through monetary tightening has to
be weighed against its impact on employment and activity.
Looking ahead, the sensitivity of headline inflation to developments in international energy prices is
significant, as the alternative forecast scenarios published in the MPC's February
Monetary Policy Report
illustrate.
- -
Were international energy and goods prices to stabilise even at permanently higher levels eventually
their direct impact on UK inflation would dissipate. Should they fall slowly in line with futures prices, inflation
is forecast to fall below the 2% target by a meaningful margin at the policy-relevant horizon.
Yet uncertainty on this dimension remains considerable. With the pandemic giving way to geopolitics as the
driver of international energy prices, they are unlikely to become easier to forecast.
This brings me to the second key element of the forecast: our treatment of the labour market and wage
developments.
Recent data confirm that the UK labour market is tight. It is tighter than we expected at the time of the
previous Monetary Policy Report published in November.4 And we expect it to tighten further in the coming
months.
On the back of this labour market tightness and in light of our Agents' recent wage survey -
which embodied
5
-
the highest expectation for pay settlements since well before the financial crisis we have revised up
underlying wage growth in 2022 to rates approaching 5%. Given expected productivity developments, this
rate is probably stronger than that consistent with the inflation target over the medium term.
But we expect the forecast stronger momentum in domestic wage and cost growth to ease beyond this year,
as headline inflation falls and unemployment rises owing to the impact of higher energy prices on real
incomes and domestic demand.
- 'big call' -
This is a crucial assumption the underlying our inflation outlook.
It is a call grounded in the experience of the past quarter of a century, as embodied in wage equations
estimated over that period.6 On that basis, in our forecast the easing of domestic inflationary pressures is
achieved without the UK falling into recession.
But, by nature, it is also a call surrounded by
uncertainty.
The structure of the UK labour and product markets may be changing, rendering the experience of the past
twenty years less relevant for the outlook of wages over the forecast period. The pandemic has lowered
labour force participation rates, while Brexit may have changed the structure of both labour and goods
markets, reducing the discipline of competitive pressures on the evolution of domestic margins and costs.
The environment created by higher international energy and goods prices may also have implications.
To the extent that any implied deterioration in the terms of trade is permanent, there will be a real hit to UK
income that must be absorbed by some domestic actor.
So, in the end, someone will have to bear that cost. The important question for monetary policy is how that
happens; in particular, how pragmatic and realistic UK firms and households are in accepting the
macroeconomic implications of the higher imported energy and goods prices.
In an attempt to protect their own real income from the unavoidable impact of higher external prices, the
longer that firms try to maintain real profit margins and employees try to maintain real wages, the more likely
it is that domestically-generated inflation will achieve its own self-sustaining momentum even as the external
impulse to UK inflation recedes.
Our baseline assumes that this risk of so-called second round effects will be contained, in part by the
monetary policy measures taken and in prospect. But should this assumption come under threat or prove to
be misplaced, a further monetary policy response would be required.
And that brings me to the third element of our published forecast: the outlook for monetary policy.
Under our baseline paths for wages and energy prices, our published scenarios suggest that leaving
Bank Rate unchanged at 0.5% indefinitely would - unsurprisingly - leave inflation above our 2% target at the
policy-relevant horizon, whereas following the market-implied path to 1.2% by the end of this year would
have left inflation somewhat below target.
I leave it to you to draw any implications for where the MPC sees the path of Bank Rate headed.
But I would emphasise that these scenarios, by nature, embody the underlying assumptions about energy
prices and wage developments that I have discussed. Since the outlook for wages and energy prices is
uncertain as I have emphasised, then the prospective path for Bank Rate is also uncertain.
Were we to see evidence of second round effects in wage and cost developments, a tighter policy than
otherwise might be required. Were energy prices to fall steadily in line with futures rather than stabilise as
we assume, then - other things equal - more policy accommodation could be maintained.
Exploring how monetary policy decisions and their communication should be managed in the face of such
uncertainties is the topic to which I will now turn in the body of my talk.
Monetary policy and uncertainty
As I hope to have illustrated, the
MPC's assessment and treatment of uncertainty has played an important
role in coming to last week's monetary policy decision. Of course, the current conjuncture has its own
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specificities many of which are uncomfortable for the MPC, as I have discussed.
But dealing with uncertainty is part of the job. If we lived in a world of perfect certainty, then monetary policy
- -
would be a much simpler perhaps even a trivial task. Sitting on the MPC at present, that is not how it
feels.
So I hope you will indulge me with scope to discuss more generally how monetary policymakers might deal
with risk and uncertainty, before concluding with some more specific remarks about where the MPC stands
today.
The economic literature on monetary policy and uncertainty is voluminous and surprisingly inconclusive.
I don't have the time to survey that literature here
today.7 But I will summarise a few points that I think are
relevant both to my own remarks, and to the current conjuncture.
Much of the analytical discussion has taken place with a framework that casts monetary policy strategy in the
form of a control problem.8 Within a system that defines the behaviour of the economy, policymakers seek to
minimise the social costs arising from the departure of inflation, employment and economic activity from their
efficient levels, using the short-term interest rate (and potentially other monetary policy instruments) as a
control variable.
This is monetary policy as engineering. That cannot be an adequate or complete characterisation of the
challenges the MPC faces. But it can help clarify and codify how to think about some of the important
conceptual issues surrounding monetary policy decisions in the face of uncertainty.
Characterising monetary policy as a control problem has a long history. It achieved renewed prominence as
the academic literature sought to formalise and evaluate inflation targeting strategies, once they were
introduced by central banks from the early 1990s.9 Since the UK was in the vanguard of these
- in part, through the efforts of many attendees of today's
developments, unsurprisingly the Bank of England
-
conference contributed richly to that research programme.10
A common starting point was the standard new Keynesian macroeconomic model. Building on the work of
Michael Woodford in collaboration with my former colleague and mentor Julio Rotemberg (who very sadly
passed away a few years ago),11 linear approximations of these models around the inflation target steady
state, in conjunction with quadratic approximations of social welfare derived from the household preferences
upon which the model was based, defined the system within which model-optimal monetary policy could be
determined.
Over the past quarter of century, a lot of ink has been spilt in academic journals, doctoral theses, and central
bank working papers exploring the features and implications of this general framework in great detail.
For those of us schooled in modern macro using Thomas Sargent's
Macroeconomic Theory textbook,12 this
linear / quadratic (or LQ) framework was associated with one important result: In
certainty equivalence.
other words, within the LQ set-up defined by Rotemberg and Woodford, the optimal monetary policy rule
governing how the policy interest rate should respond to changes in the state of the economy is invariant to
distribution of shocks to that economy.
This does not mean that uncertainty does not matter. On the contrary, shocks are the drivers of economic
fluctuations. The welfare losses associated with inflation volatility stemming from those shocks provides a
rationale for the stabilisation of inflation that underlies the adoption of inflation targeting.
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But the analysis implies that the optimal policy rule defining how the policy rate should respond to
-
economic developments does not change if and when the degree of uncertainty in the economy increases.
My impression is that this result did not sit comfortably with monetary policymakers. And - as is often the
-
case in the academic literature a result proving something did not matter proved to be the catalyst for a
research agenda seeking to demonstrate that it did.
Engineering again provided some of the inspiration for this research programme. But different strands of the
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engineering literature were taken up, which when filtered through the macroeconomic lens offered
different implications for monetary policy.
One strand of research developed from so-called If uncertainty entered the system
Brainard uncertainty.13
via the parameters of the economy, rather than as shocks to the economy, then the consequences were
different.
For example, if the slope of the Phillips curve governing the relationship between inflation and unemployment
were uncertain, then the Brainard view implied that the monetary policy response should be attenuated
relative to the case when such uncertainty were absent. And the greater the uncertainty about the slope, the
greater the attenuation required.
The intuition behind this result is reasonably straightforward. Uncertainty about the slope of the Phillips
curve introduces scope for the monetary policy response to any specific shock to be mis-calibrated. That
mis-calibration threatens to introduce additional volatility into the inflation outlook beyond that created by the
shock itself. So policymakers need to manage a trade-off between, on the one hand, the impact of the
underlying shock on inflation and, on the other hand, the impact of any policy mis-calibration on inflation.
Managing this trade-off implies a less aggressive response to any specific shock than would be desired if
there were no uncertainty about the parameters of the economy, and thus no scope for policy mis-calibration.
On occasion, policymakers have embraced this Brainard view in rationalising their decisions. Former
Federal Reserve Vice-Chairman Alan Blinder went so far as to state that the FOMC should first
or loosen monetary policy to 'get it Then do
"estimate how much you need to tighten right'. less".14
But other strands of the engineering literature offer guidance pointing in the opposite direction.
One thread falls under the label
'robust control'. Broadly speaking, the desire for robustness in policy
design starts from the premise that 'the perfect should not become the enemy of the
good'.15
In the face of uncertainty about the outlook for and structure of the economy, policy should be based on
principles that give good outcomes across a broad set of possible eventualities, rather than an optimal
outcome in one specific context, especially if the optimality of that outcome is fragile to changes in context.
One - perhaps extreme - characterisation of such robust control thinking starts from the adoption of a
so-called MINIMAX strategy to monetary policy decisions.16 Even if it is too abstract to offer a practical guide
to monetary policy, it can act as a device to help clarify some ideas underlying the policy debate.
The MINIMAX approach involves choosing the policy setting which works best in the worst circumstances
that you might face across the possibilities of how the economy behaves.
More precisely, if we characterise uncertainty as being reflected in a set of different possible models of the
economy, policymakers seek to minimise the welfare cost in that model where those welfare costs are
highest, given the observed developments in macroeconomic data.
The intuition here can be understood using a recent practical example. Most new Keynesian
macroeconomic models have more than one steady state. But the inflation targeting literature originally
- -
focused on developments around one of those states, namely and of course unsurprisingly that defined
by the inflation target itself.
But in the face of deflationary risks and the aftermath of the global financial crisis, another steady state - one
characterised by the zero lower bound on nominal interest rates, the liquidity trap and the threat of persistent
-
deflation spiral could no longer be ignored.
Since this other steady state entailed lasting deviations from the inflation target, the threat of falling into it
weighed heavily on central bank thinking. Indeed, some characterised the liquidity trap as an absorbing
state: the Hotel California of monetary policy, where you can try to check out but can never leave.
The experience of Japan since the early 1990s was held up as a salutary example.
Robust control MINIMAX thinking implies an aggressive response to the threat of falling into such a
deflationary liquidity trap. Since the costs of doing so are large and persistent - possibly permanent -
the magnitude of the policy response should rise as the risk of entering such a trap increases. Monetary
policy should do everything it can to avoid a deflation trap. Go big and go early. If what you have done is
not enough, do more. No Brainard-like attenuation in the face of risk here.
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By nature, when seen in isolation, such an approach is highly asymmetric and has been criticised as such.
But should the implied aggressive easing in the face of deflation prove successful, then the balance of risks
and uncertainties faced by monetary policymakers may shift abruptly. If the biggest threat to price stability
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then became the emergence of a self-sustaining cost / price spiral, then a literal but symmetric
interpretation of the MINIMAX approach might then entail an aggressive tightening to choke off the threat of
such a spiral.
As this discussion illustrates, the literal-but-symmetric interpretation of the MINIMAX approach to robust
monetary policy would imply very policy responses in the face of
'activist' uncertainty. In this framework,
from having their foot to the floor with the monetary accelerator, policymakers might have to switch in short
order to stamping on the monetary brake.
Unsurprisingly, on my reading, that characterisation also finds little sympathy in policymaking circles. In the
interests of avoiding tail outcomes, such activism threatens to induce volatility into monetary policy, financial
markets, the economy and inflation in other circumstances, which is both costly and hard to communicate.
But the research on monetary policy and uncertainty as a whole has influenced the discussion and conduct
of policy in practice. I would pick out a number of lessons that have been drawn.
 The magnitude and evolution of uncertainty and risk can, do and should influence monetary policy
decisions.

Not all uncertainty is the same. The way uncertainty influences monetary policy decisions depends on
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the circumstances and the nature of the uncertainty its source, its persistence, its magnitude that is
being faced

Monetary policy should not be paralysed in the face of uncertainty. If policymakers were to wait until all
uncertainty is resolved before taking decisions, they would wait forever.

At the same time, there is no general rule that says policy responses should either be attenuated or
more activist in the face of uncertainty.
 While it is helpful to ask what might be the most adverse consequences of any decision taken, possible
tail outcomes need to be balanced in a judicious and pragmatic way against more likely outcomes.
I see these elements as being embodied in the so-called risk management approach to the formulation of
monetary policy, which has been embraced by many central bank policymakers.17
At a practical level, in recent years this approach has acknowledged the need for monetary policy to be
cognisant of uncertainties and risks stemming from (say) the lower bound on policy rates or the threat of a
liquidity trap, while at the same time recognising that policy considerations cannot ignore the implications of
18
decisions should the trap be avoided and inflation rise over the medium term.
The former aspect of risk management has justified a more aggressive response to downside shocks to price
stability as the lower bound drew closer. Our discussions in the MPC now also address the latter aspect of
the risk management approach: how policy should evolve as inflation rises and those asymmetric risks
stemming from the lower bound recede.
In undertaking this discussions, the risk management approach entails judgement and pragmatism.
Engineering is not enough. The inevitable subjectivity of these judgements re-introduces some art into the
science of monetary policy.
And it is differences in those judgements across the members of the MPC that lead to the finely balanced
vote outcomes like that we saw last week.
Guiding monetary policy by the stars
-
In discussing those judgements and, in particular, in converting them into monetary policy decisions about
- I am often confronted by questions about 'starred variables' in the standard new Keynesian
Bank Rate
model.
In highly stylised form, three starred variables lie at the heart of these models: Pi-star, the steady state rate
of inflation; R-star, the Wicksellian neutral real rate of interest; and Y-star, the potential level of economic
activity.
Pi-star is the easiest to dispose of. Within an inflation targeting framework, the steady-state level of inflation
is determined exogenously by the central bank's mandate. In that context, the inflation target should be as
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clear as possible: uncertainty about the target only adds unnecessary and costly volatility into the
economy.
The UK's inflation targeting framework delivers on this
score. The inflation target is defined as an annual
rate of CPI inflation of 2%, which is given primacy in the remit delivered to the Bank of England by the
Treasury and deemed to hold at all times.
- -
While there are inevitably times like those we are experiencing today when unforeseen shocks to the
economy drive inflation away from target. These circumstances beg questions about how quickly it is
feasible and/or desirable to return inflation to target. But behind those questions, the clarity of Pi-star as
expressed in the form of the inflation target is the touchstone for the MPC's approach to monetary policy.
R-star and Y-star are trickier to deal with. These are both real variables that, at least over medium-term
horizons, are largely independent of monetary policy.19 They cannot be determined or even much influenced
by the central bank.
Moreover, R-star and Y-star are not directly observable. They are latent variables, surrounded by
Researchers don't always agree on what they
considerable conceptual as well as empirical uncertainty.
mean, let alone how to measure them, and still less what their specific value is at any point in time.
The Wicksellian neutral real rate of interest is a concept that may be recovered from the data and interpreted
in a specific model context after the fact and with the benefit of hindsight. Even then, that exercise is difficult
and unlikely to prove definitive. But R-star is not a very meaningful guide or reference for real time monetary
policy making.
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In similar vein, the academic literature suggests that over-reliance on uncertain and likely flawed real
time estimates or R-star and/or Y-star can lead to significant monetary policy mistakes.20 In research
exploring the origins of the 1970s 'Great Inflation' in the United States, Athanasios Orphanides has explored
how the Federal Reserve repeatedly over-estimated the level of US potential GDP (and thus under-
estimated the extent of inflationary pressure in the US economy).21 Such analysis has been replicated in
other jurisdictions and periods with similar results.
Orphanides' historical work was conducted in parallel with research by his then colleagues at the Federal
Reserve exploring the performance of simple policy rules across a variety of empirical models.22
One lesson drawn from this cross-model evaluation of the robustness of simple monetary policy rules is that
rules that rely on differences consistently perform better than rules that rely on levels. In other words, rules
where changes in policy interest rates are driven by the evolution of growth rates of economic activity
outperform rules where the level of the policy rate is determined on the basis of estimates of the neutral real
rate and output gap.
One explanation of this result is that, by their nature, difference rules largely eliminate the influence of R-star
or Y-star from the determination of policy choices. Difference rules thereby avoid introducing the policy
mis-calibration and resulting noise that stems from using poorly estimated or mis-specified R- and Y-star
measures.23
I will explore briefly this idea in a narrower setting using a version of a model built by my colleagues
Rich Harrison, Martin Seneca and Matt Waldron (a sketch of which is provided in the Annex).
Essentially, this is a canonical three equation new Keynesian macroeconomic model estimated for the UK,
with a few additional features to ensure more realistic persistence in inflation and output. Although estimated,
I would emphasise that this is a stylised representation of the UK economy - I am using it for illustrative
purposes, rather than to foreshadow any specific policy decision.
In the background of the model are shocks that introduce a difficult
'cost-push' trade-off between inflation
volatility around target and output gap volatility, which monetary policymakers seek to manage by varying the
policy rate.
My focus here is on the treatment by monetary policy of shocks to the R- and Y-star concepts embodied in
this model. One can think of these as risk premium and productivity shocks. The crucial feature is that
shocks to these starred variables have two components: one temporary, the other persistent. Neither
policymakers nor households and firms can observe these shocks in real time. Rather, they have to learn
about the persistence of the driving shocks over time on the basis of how the observed data evolve.
I should recognise at this point the debt I owe to my colleagues Jack Meaning and, in particular,
Alberto Polo, who helped me with the simulations of this model. The past couple of weeks have been a busy
time for me with the MPC: I would not have been able to complete this work without their considerable help.
Charts 1 and 2 illustrate the advantages of difference rules over level rules in this set-up. When restricted to
simple forms and optimised, a difference rule performs better than a level rule in stabilising inflation and
lowering social losses.
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This is true however much weight is placed on output gap stabilisation relative to inflation stabilisation
in other words, for all values of in standard policy evaluation -
'lambda' exercises.24 And at least in our set-
-
up it is true even as the importance of the persistent shock to the starred variables relative to the temporary
shock diminishes.
The intuition behind the result is as I have discussed. If monetary policy decisions are based on a
then the difference rule is more 'forgiving' of those
mis-interpretation of the shock driving R-star,
mis-perceptions than the level rule, and less noise is introduced into the system as a result.
This is illustrated by the impulse responses shown in Chart 3. These show the evolution of model variables
following a risk premium shock that lowers R-star persistently, but is believed by policymakers, firms and
households to be temporary.
The level rule implies that policy rates snap back after the incidence of the shock. After all, if the downward
shock to R-star is temporary, failing to raise policy rates in parallel with the recovery of R-star would lead to
excessive monetary ease. But because the true shock to R-star is persistent, that approach creates a
monetary tightening that widens the output gap and weighs on inflation.
By contrast, the difference rule leaves policy rates lower and therefore does not induce the same instability in
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output and inflation. It stabilising properties are superior and associated with a slower, steadier and more
persistent rise in the policy rate.
In the end, the learning process embodied in this model ensures that the outcomes of the different rules
eventually converges. But during this process of convergence, the difference rule dominates in terms of
social welfare and implies a slower, steadier and more persistent evolution of policy rates following the
characterisation of a policy response.
shock: one 'steady-handed'
Of course, Chart 3 only illustrates the responses for one combination of underlying shocks and perceptions.
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A full analysis would explore all those combinations. But we can show as illustrated in Chart 4 that it is
possible to construct scenarios (defined here as combinations of underlying shocks) that create this
steady-handed response under the difference rule.
This is probably the most relevant result for the current conjuncture. Where there is uncertainty about the
level of R-star, the scenario shows the advantages of setting policy rates on the one-step-at-a-time basis
embodied in difference rules. Policies that attempt to move quickly back to preconceived neutral levels
without reference to the real time evolution of the data run the risk of adding noise and volatility through a
mis-calibration of the policy response.25
Monetary policy outlook
Coming back to last week's monetary policy announcement, the MPC agreed to continue with a
further
modest tightening of monetary policy.
Placing the specifics of that decision in a longer context, since I joined the MPC in September we have: (1)
retired the forward guidance that signalled unchanged policy rates; (2) brought asset purchases to an end;
(3) started to raise Bank Rate and continued that process last week; and (4) announced a start to the
reduction of asset portfolios accumulated as a result of QE.
From a starting point of substantial policy accommodation, this is a consistent, measured and resolute set of
actions intended to rebalance the stance of monetary policy and address the inflationary pressures that have
emerged.
We have signalled that more is to come in the coming months if the path sketched out in our February
forecast plays out. But equally we have flagged that the outlook for Bank Rate beyond the coming months is
uncertain, reflecting the two-sided risks to inflation at the policy-relevant two to three year horizon.
How the stance of monetary policy evolves will depend on how the economic outlook evolves. This should
be self-evident. But it is an assertion that bears repeating today.
Not all of the MPC's decisions last week were
unanimous. The published vote pointed to a finely balanced
decision over whether to raise Bank Rate by a standard 25bp to 0.5% or to hike by a bigger 50bp step in
order to get back to pre-Covid levels of Bank Rate in one bound.
That decision was decision was finely balanced for me as an individual voter on the MPC, as well as for the
overall balance of votes on the Committee as a whole. The considerations I have outlined in this talk help to
explain why I voted with the majority on this occasion.
First, I am sceptical of efforts to return Bank Rate quickly to some pre-defined neutral level or terminal rate,
given the inevitable conceptual and empirical uncertainty surrounding such a level or rate. As we have seen,
such an approach risks increasing inflation and output volatility if policy is mis-calibrated owing to assuming
the wrong value of R- or Y-star.
Better to adopt a more measured and data-dependent approach, which learns from how the economy
responds to each step taken rather than pre-commits to a concept surrounded by uncertainty. This is likely
to produce a steadier, more persistent and more purposeful path for policy rates.
Second, I worry that taking unusually large policy steps may validate a market narrative that Bank policy is
either foot-to-the-floor on the accelerator or foot-to-the-floor with the brake. This narrative was fuelled by the
(perhaps necessarily) activist responses to the onset of global financial crisis and pandemic.26 It is not
unique to the UK.
In my mind, the perceptions underling this narrative may help to explain both markets' reluctance to price in
policy tightening in the middle of last year and the subsequent relatively rapid steepening of the money
market yield curve of late as central banks have embraced the need to address inflationary pressures.
And such perceptions can shape reality. If such swings in market sentiment and expectations were to
weaken central banks' ability to steer the market rates of most relevance to spending and investment
decisions, then the transmission of monetary policy will be at risk.
Of course, there may be occasions where aggressive monetary policy actions are necessary. Recent history
is littered with them: the global financial crisis and onset of the pandemic are cases in point. I would certainly
not wish to rule out changes in Bank Rate of more than the usual 25bp in all circumstances.
Retaining flexibility is important. And given the inflationary pressure