Monetary policy: prices
versus quantities - speech by
Ben Broadbent
Given at the National Institute of Economic and Social Research
Published on 25 April 2023
In this speech Ben asks whether the transmission of monetary policy is better
understood in terms of its impacts on interest rates and bond yields, on the one
hand, or monetary aggregates on the other. He considers the relationship between
those aggregates and inflation, both over the past and more recently. He also
explains how the MPC takes account of "QT" in its forecasts.
Ben Broadbent
Deputy Governor, Monetary Policy
Speech
Introduction and summary
Good morning!
An old question in economics is this: is it right to think of the stance and effects of monetary policy
in terms of interest rates and asset prices - or are these things better measured by the size and
growth of banks' balance sheets, whether that of the central bank ("narrow money") or commercial
banks ("broad money" [1])?
Old it may be, but this question throws up a couple of others that are relevant today.
First, is the inflation we're experiencing mainly the result of the growth in broad money in 2020 -
and were both the "inevitable" result of the QE conducted that year, as some have said?
Second, how does the MPC take account of asset sales ("QT") in its economic forecasts - does
that not require an additional and explicit estimate of its impact on activity and inflation?
Given the extraordinarily high inflation we've been experiencing in the past couple of years, and
the use of "unconventional" policy over the past decade or so, these are important and legitimate
questions. That is my excuse, at least, for the inordinate length of this speech (for which I
apologise). I have attempted to summarise the main points in this introduction.
In some ways the opening question - should we think of monetary effects in terms of prices
(interest rates and asset prices) or quantities (monetary aggregates) - draws the contrast
between the two a little too starkly. They're not mutually exclusive. In the so-called "IS-LM" model,
through which many people are introduced to macro-economics, a rise in the supply of money
does eventually lead to a proportionate rise in consumer prices. It's just that it operates via interest
rates. That's because, as long as people are free to borrow and lend, demand in these models is
fully pinned down by current and (expected) future real interest rates. The expansionary effect of an
injection of money therefore relies on its first depressing the yield curve and the stance of policy is
fully captured by the prevailing level of interest rates (relative to some underlying, "neutral" level).
If this core theory appears to favour prices over quantities then the data too would seem to lean in
that direction - or, at least, to caution against too crude an interpretation of the monetary
aggregates. History demonstrates that shifts in the quantity of money have often been driven - or
at least accompanied - by shifts in the demand for deposits (i.e. what the private sector would like
to hold for a given level of spending). Following the financial liberalisation earlier that decade,
banks began during the 1980s to pay interest on standard deposit accounts. This increased their
attractiveness, relative to other "stores of wealth" - they were not the precursor to higher spending
and inflation - and broad growth remained stubbornly high even as inflation declined sharply (at
least until the boom at the end of the decade). For similar reasons broad money growth was
extremely strong throughout the first fifteen years of inflation targeting (1992-2007).
Nor is there a tight correspondence between "narrow" and "broad" money. QE involves the
creation of central bank reserves to buy financial assets (usually government debt). So in the
decade or so that passed between the first use of the policy in 2009 and the onset of the
pandemic, reserves grew extremely rapidly. Yet broad money growth was significantly slower than
it had been before the crisis (Chart 1). And, in both periods, average inflation was close to 2%
(Chart 2).
Page 4
Chart 1: Reserve creation neither necessary nor sufficient for strong growth of
broad money
Sources: ONS, Bank of England and Bank calculations. Unless stated otherwise "broad money" refers to M4 excluding
intermediate other financial corporations (M4ex). This is available from 1997 and projected backwards using aggregate M4
growth before then.
Chart 2: Broad money growth slowed significantly after the financial crisis,
inflation still close to 2%
None of this means that at the margin (holding everything else fixed) QE doesn't add to broad
money or ultimately to the level of prices. Nor does it imply that the quantity measures are never
useful or important. It would be as wrong categorically to ignore monetary aggregates as it would
to assume that they're the only thing you need to consider.
As far as the theory's concerned, people can't always borrow and lend freely. In the presence of
these and other "financial frictions" the availability of liquid assets can matter for spending,
independently of interest rates. Besides, interest rates themselves matter only relative to some
"neutral" rate that cannot be observed directly. So, in practice, monetary policymakers should
always pay attention to other - indeed any - indicators of incipient inflationary pressure. And
although changes in banks' deposits have often been driven by shifts in demand there are times
when they look more supply-led.
Arguably, the surge in broad money in 2020 looks like one such episode. Supported by the
furlough scheme, and because their spending was held back by the lockdowns, households
accumulated significant deposits during the pandemic (Chart 3). While not literally a "helicopter
drop" this came quite close to an exogenous increase in the stock of household (and aggregate)
money. Monetary authorities (including the MPC) certainly asked themselves at the time whether,
independently of the level of the yield curve, the liquid nature of these assets would give a
particular impetus to consumer spending once the lockdowns were lifted.
Chart 3: Households accumulated significant deposits during pandemic
However, what the history does demonstrate is movements in broad money can (and usually do)
occur independently of developments in the size of the central bank's balance sheet. Commercial
banks can create and withdraw deposits without any commensurate change in their reserve
holdings at the central bank. If the jump in broad money during the pandemic really was the
"inevitable" consequence of the QE at the time one presumably would expect to have seen the
same after every preceding set of asset purchases. As Chart 2 illustrates that's not the case.
And even if it looks more "supply" than "demand" led - in the sense that these were "excess"
deposits - I think the evidence also makes it hard to argue that they alone can explain the inflation
that's followed. For one thing, the growth of consumer spending over the following year, once the
pandemic restrictions were lifted, was actually weaker than either the MPC - or, indeed, a simple,
money-driven consumption function - had predicted (Chart 4).
Chart 4: MPC over-predicted demand coming out of the pandemic
Sources: ONS, Bank of England and Bank calculations.The money-based forecast is based on an error correction model of
consumption estimated over 1992-2019 that includes separate terms for liquid assets and illiquid assets in both the long-
term relationship and short-term dynamics. It is based on a consumption function set out in Aron et al (2011) .
Nor does the pattern of price rises, over the past couple of years, fit the story. A pure,
moneydriven inflation affects all prices equally. What we've actually seen are huge shifts in relative prices
- first the jumps in those of non-energy traded goods in 2021 and then, in 2022, the enormous
rises in the costs of imported food and energy.
The important point here is that, however you measure it - whether in terms of prices (interest
rates) or quantities (monetary aggregates) - monetary policy operates with a lag. During that
interval, and at least until policy can react to them, there are lots of things - "shocks and
disturbances" (as the MPC's remit puts it) that can affect inflation. In this case it's clear what those
have been: the hits to the supply of non-energy goods during the pandemic, to those of energy and
food during the war, and the resulting rise in their global prices. Thanks to the significant hit to real
incomes they involved, these shocks have also had sizeable second-round effects on domestic
wages and prices. As an explanation for the inflation we've experienced I think this fits the actual
data better than the single fact of strong household money growth during the pandemic.
It's always possible, at least with the benefit of hindsight, to construct an alternative path for
monetary policy over the past that would have kept inflation on target, even in the face of these
subsequent shocks. But that's not the same thing as saying that the actual policy was "inevitably"
going to result in excessive inflation. Simulations suggest that, had that alternative (much tighter)
policy path been followed, and then had Russia failed to invade Ukraine, inflation would now be
materially below target.
Anyhow, what follows is a walk - rather a long walk, I'm afraid - through these various points. Less
ink is spilled on the second question, concerning QT: should the MPC not include in its forecasts
some identifiable and separate effects of asset sales on activity and inflation? Having argued that
the policy is transmitted to demand and inflation largely via asset prices my answer to this will be
"no". The Committee has said that the size of the Asset Purchase Facility (APF), the vehicle
through which QE and QT are conducted) will be reduced gradually and predictably and, to that
end, announced last September the exact planned reduction of the APF over the following twelve
months. As such, it's reasonable to suppose that the impact of QT, even in prospect, is already
captured in the prices of assets on which we condition our forecasts. To add something else
would be to double-count the effect.
Macro models and the determination of demand
As an undergraduate one of the books I had to read was a collection of essays about monetary
economics by one of my lecturers, Frank Hahn. It begins with this rather provocative sentence:
"The most serious challenge that the existence of money poses to the theorist is this: the best
developed model of the economy cannot find room for it".
As a newcomer to the subject I found this a bit concerning (not to say alarming). If economics can't
even say why money exists how can it hope to explain what it does?
Reading on, one's concern subsided a bit. Hahn was, by training and inclination, a general
equilibrium theorist. For him, as he explained in the very next sentence, "the best developed
model of the economy" was the highly stylised description developed by the great economic
theorists Ken Arrow and Gerard Debreu. For all its sophistication, the Arrow-Debreu model is one
in which, by assumption, trade is entirely costless. In this perfect economy there's a market and a
price for the exchange of any two goods or services - including those for future delivery - without
the need for a medium of exchange or any sort of costly financial architecture. So it's not a huge
surprise that, having ruled out at the start the conditions that might require it, this model should
"have no place" for money.
What Hahn's bit of rhetoric does suggest is that you need some sort of financial friction - some
departure from the platonic realm of Arrow-Debreu - to explain why money might matter. Take, for
example, the relationship that determines consumer spending in many models of the
macroeconomy. Typically, this originates with a question: how would a forward-looking consumer, able to
borrow and lend relatively freely, allocate his or her spending over time? After solving that stylised
problem, and a bit of manipulation, you end up with something like this:
[1]
Here, in what I've described rather grandly as equation [1], f(.) is some function of current and
future (real) interest rates and the term in brackets is total wealth. Wealth has two components: net
financial assets W (with an average real price p) and the present value of current and expected
future labour income, or "human wealth" H. (In this set-up, greater "consumer confidence" can be
thought of as a rise in those future expected incomes, and therefore this H term.) Higher real
interest rates depress both p and H because they increase the rate at which future income is
discounted.
Because there's only one market here (in borrowing and lending) the demands of this set-up
aren't quite as onerous as in Hahn's "best developed model of the economy", with its multiple
barter exchanges. Nor do you have to assume that people can borrow and lend at precisely the
same rate of interest (it does matter that they can do so at all). And in practice, estimated
relationships of this sort have all sorts of dynamics within them - consumer spending won't adjust
instantaneously to shifts in the right-hand-side variables - allowing the model to fit the data that
much better.
But the core relationship for consumption, in most macro models, will have something like [1]
within it. And the important thing here, for our purposes, is that there's no identifiable and direct
role for money. The same is true of the relationships used to model business investment. So at
least according to this description, monetary policy affects demand (and thereby inflation) only to
the extent it influences "r" or "p".
You might think that there's another, more direct channel, via the wealth term "W". At least as far as
their gross financial assets are concerned quite a bit of households' (and overall private-sector)
wealth is held in the form of deposits in commercial banks. These also account for the vast
majority of money in the economy (sometimes called "broad money").
So wouldn't the creation of new deposits add directly to W and boost demand that way, even if
there were no change in interest rates or asset prices? The answer is "no". What one has to
remember is that, for every pound of deposit liabilities, a bank has on the other side of its balance
sheet a pound's worth of lending, or something like it: a matching obligation from the private
sector to the bank. Indeed, it's precisely in the act of extending credit that a commercial bank
typically creates "new" (broad) money[2]. So, at least for the private sector as a whole, its
interactions with the banking system - deposit claims on the one hand, bank loans on the other -
are essentially a wash and do not represent net wealth[3] (Chart 5).
Chart 5: Households' deposits matched by what they owe the banks
Sources: ONS and Bank calculations. Financial balance sheet of the household sector, 2022 Q4. Bank deposits are
sterling deposits with UK monetary financial institutions (MFIs). Equity & debt assets include other deposits, holdings of
debt instruments and equity & investment fund shares/units. Pension assets are insurance and pension schemes. Bank
loans include sterling short-term loans from MFIs and loans secured on dwellings. Debt liabilities include other loans to
the household sector.
The same is true of new deposits at the central bank (reserves, or "narrow money") created by an
open-market purchase of assets (what we now call "QE"). QE has sometimes been described as
"printing money". I think this is a pretty misleading phrase. It seems to suggest that the central
bank simply doles out cash to the private sector, with nothing happening in return. (This kind of
"helicopter drop", as the economist Milton Friedman described it, would arguably add to the
private sector's net wealth[4].)
For one thing, however, the money created by QE is not like cash (i.e. the zero-interest instrument
described in some textbooks). These days, at least, central bank reserves pay interest[5]. I'll come
back to this point later on.
Second, central bank money is created only in the process of buying - and therefore removing -
an asset from the private sector (usually government bonds). It's not a transfer of wealth - it's an
asset swap. As far as the private sector is concerned, QE simply replaces one interest-bearing
claim on the public sector (gilts) with another (central bank reserves). Subject to any change in the
prices of those assets there is therefore no difference in the value of the private sector's overall
asset holdings immediately before and after a QE transaction. Just as with commercial bank
("broad") money, the creation of new central bank money, by these means at least, does nothing
directly to add to the net wealth of the private sector.
And if, therefore, a relationship like [1] prevails, it's only by changing interest rates and asset
prices that monetary policy, including so-called "unconventional" policy, can work. These prices
are in some sense a "sufficient statistic" for what policy does. Other indicators (including, say,
monetary aggregates) wouldn't give you any additional information about its impact.
An IS-LM refresher
This dichotomy in the way monetary policy is transmitted is also a feature of the so-called "IS-LM"
model of demand.
This is a hardy perennial of macro-economics. Originally written down by John Hicks in 1937, as a
distillation of what he viewed to be the essential arguments in Keynes's General Theory, it still
serves as the introduction to the subject for many students.
And right at its heart, IS-LM has this same assumption built into it that monetary policy can only
affect demand and inflation via interest rates and asset prices (Chart 6). As described by the "IS"
curve, you need lower yields to boost demand ([1] can in fact be seen as a slightly more modern
underpinning for this relationship). It's therefore only by those means - only by lowering interest
rates and bond yields - that an injection of money, which serves to shift the "LM" curve to the right,
can affect spending or ultimately inflation.
Chart 6: In the IS-LM framework, monetary policy affects demand via prices
'Y' is real output and 'r' is the real interest rate. In 'IS-LM', 'IS' stands for investment-saving and
'LM' for liquidity preference-money supply.
How does that happen? The textbooks -the now-ancient tomes I was given as an undergraduate,
at least - describe a process very much like QE. Central banks are said to influence the yield
curve by buying and selling government debt in the open market, supplying and withdrawing
reserves in the process. In Chart 7 the demand for this central bank money is given by the MD line.
It slopes downwards because - all else equal - the willingness of the private sector to hold
reserves is meant to decline as the yield on competing assets like bonds goes up. And when the
central bank buys bonds, paying for them with newly-created reserves (shifting the Ms line to the
right), their yields therefore decline. In "equilibrium", for those extra reserves to be willingly held,
the competing assets have to become relatively less attractive - hence the decline in yields.
Another, perhaps more intuitive, way to think about the effect is that purchasing government bonds
directly raises their price (this is the same as a decline in yields). Monetary expansions of this sort
therefore raise the supply of central bank reserves, simultaneously lower the level of interest rates
and bond yields and, depending on the slope of the "IS" curve, boost demand and subsequently
inflation[6].
Chart 7: Open-market asset purchases by the central bank raise the supply of
reserves and push down interest rates
'M' is real money balances and 'r' the real interest rate. This model describes the equilibrium in
the money market between supply of and demand for money balances, according to Keynes'
theory of liquidity preference. It underpins the LM curve.
The IS-LM model can be a useful way of thinking about monetary policy, and in particular QE.
Chart 7 does have its drawbacks, however, or at least some important oversimplifications. For
example, while it may capture some important aspects of how asset purchases work it's not really
an accurate representation of how the conventional policy rate is set. That's fine for today, as I'm
focusing more on QE. But one should at least be aware that the monetary authority needn't vary
the supply of reserves in order to change its policy rate[7].
Second, the downward slope of the MD line was often justified, in the textbook account, by the
assumption that reserves don't pay interest. This would mean that any rise in bond yields is bound
to make central bank money comparatively less attractive to hold. These days, however, reserves
do pay interest (at the official central-bank rate). As a result, central bank money and government
debt - the two sides of the QE transaction - are closer substitutes than they otherwise would be.
This has the effect of making the downward slope of the MD line less pronounced.
Third, the model - the way it was often taught in the textbooks, at least - glosses over the
distinction between "narrow" and "broad" money. For the wider economy it's clearly the second
that matters. Firms and households don't have deposits at the central bank - for them, "money" is
what they hold in their commercial bank accounts. But, as conveyed to students, IS-LM elides the
two, assuming that the one is just a multiple of the other[8]. The implication would be that central
banks can control broad money more or less directly and as precisely as they do their own
balance sheets. In practice, however, as we saw in the introduction, the two have behaved rather
differently. I'll discuss this more fully in a moment.
Monetarist objections to IS-LM
None of this is fatal for IS-LM. The model can be adapted and expanded to accommodate some
of these complications. And, during the debates about inflation control in the 1960s and 1970s,
most economists - of all persuasions - would have accepted that Chart 7 captured an important
part of the transmission of policy (open-market operations, at least).
But the "monetarists" raised a deeper objection - and it concerned precisely this assumption that
an increase in the supply of money worked only by lowering the level of interest rates. They argued
that it could also affect spending more directly. In essence, if one is at least to preserve the
language of the model, their point was that a rise in the supply of money - broad money at least -
should shift not just the "LM" curve to the right but the "IS" curve as well (Chart 8).
Chart 8: Monetarists argued that money affected spending directly, not just via
interest rates and asset prices
Imagine something like Friedman's "helicopter drop" - a sudden, windfall addition to everyone's
bank account. On its own, if nothing else happened, this would push up household wealth (the "W"
term in [1]). So even the conventional IS curve says the result would be stronger demand. But let's
suppose the "drop" is financed by a tax on other, non-monetary assets, leaving household wealth
in aggregate (the "W" term) unchanged. Because people's financial positions differ, partly by age
- older people have positive net financial wealth, those who've just bought a house have negative
"W" - this pair of transactions redistributes resources, away from long-term savers and towards
borrowers. And if the latter group is "credit constrained" - if they'd like to spend and borrow more
at the prevailing level of interest rates but, perhaps for want of collateral, cannot do so - then this
transfer should boost demand. Net payers of the tax will cut back on their spending by less than
the increase in demand from beneficiaries of the policy. Even when offset by an equal and
opposite tax, and even for given interest rates, this addition of liquid assets would add to demand
and inflation.
To me this sounds perfectly plausible. Indeed the MPC has often argued that these constraints can
matter for the transmission of more standard changes in interest rates. If borrowers are (on
average) more credit constrained than savers, and therefore more sensitive to changes in cash
flow, equal declines in debt interest costs on the one hand, and deposit receipts on the other, will
on balance be expansionary.
Nor is this the only way in which a "helicopter drop" might matter. The deeper point is that, if the
very existence of money is accounted for by the presence of various financial frictions (i.e.
departures from Hahn's Arrow-Debreu world) then supplying more of it might plausibly ease these
constraints. Conceivably this could boost spending even without any change in bond yields or the
prices of other assets.
If for no other, this is one reason why policymakers should always pay attention to the behaviour of
the monetary aggregates. One should not presume that an IS relationship (based on something
like [1]) always captures fully the degree of inflationary pressure in the economy or the
transmission of monetary policy.
Stronger claims about quantities not borne out by the evidence
Equally, one cannot conclude either that these aggregates are the only thing you need to consider.
Nor should one imagine -this was an approximation that that both "Keynesians" and "monetarists"
often seemed to make - that the one (broad money) is uniquely determined by the other (narrow
money). Using recent experience in the UK I want to discuss some of the challenges in interpreting
these data.
Some, highlighted in the introduction, are evident in a simple split of the data over the inflation
targeting period (for convenience, I've reproduced the relevant Charts here). For the first fifteen
years of the current regime, from late 1992 until the beginning of the financial crisis in late 1997,
there was very little growth of "narrow" money (and none until reserve remuneration began in
2005), yet "broad" money grew rapidly, by over 71⁄2% a year. By contrast, during the ten years or so
between the first use of QE in 2009 and the onset of the pandemic, central bank reserves rose
very significantly, as one would have expected. Yet broad money growth slowed, to less than half
the rate it had been during those earlier, pre-crisis years. In terms of the money that really matters
for the economy - deposits held by households and firms in commercial banks - its rate of
creation has been much lower during QE than beforehand.
Chart 1: Reserve creation neither necessary nor sufficient for strong growth of
broad money
Sources: ONS, Bank of England and Bank calculations.
Chart 2: Broad money growth slowed significantly after the financial crisis,
inflation still close to 2%
Sources: ONS, Bank of England and Bank calculations.
And over both periods, despite these gyrations in the respective measures of money growth,
average CPI inflation was pretty much bang on 2%.
What might explain this? How is it that the central bank's balance sheet can expand so rapidly
without a commensurate impact on those of commercial banks? And why, at least across these
two periods, does neither measure of money growth seem to have much to do with inflation?
What follows is not remotely a full and comprehensive answer to these questions. Nor are the
points made here remotely novel. Over the years, reams have been written about all of them,
including in some very good articles by Bank economists. But they're certainly relevant in
interpreting these data and therefore worth touching on.
One I mentioned in the introduction: commercial banks can create and withdraw deposits -
principally in the act of extending or reducing the quantity of their lending - independently of their
reserve holdings at the central bank. Suppose you borrow £100 from a bank. What the bank
actually does, in granting the loan, is to put an extra £100 into your deposit account. This is newly
created (broad) money, matched, on the asset side of its balance sheet, by the debt you now owe
the bank. This process doesn't require any matching increase in reserves[9].
It has its limits, not least because banks are obliged to fund a proportion of their lending with
equity (rather than deposits). They can't (and don't) expand or reduce the quantity of money
indefinitely. And monetary policy, via its effects on the wider economic environment, will also
influence these decisions. But, if the suggestion in some of the simpler textbooks is that the
central bank can control the size of commercial banks' balance sheets as easily and directly as its
own, this is clearly not the case. Influence is not control and broad money certainly shouldn't be
considered an instrument of policy.
Second, and whatever the process by which their supply is determined, quantities of money -
whether narrow or broad - can also be affected by changes in the demand for deposits. If the
private sector wants to hold more of its wealth in this form, for a given level of spending and
economic activity, then accommodating that demand has little effect.
Chart 9: Unless accommodated and matched by greater supply a rise in the
demand for money is contractionary
(r'eq) shows the increase in the interest rate if the higher demand for money had not been
accommodated by an increase in money supply.
And third, I think the experience of QE has shown pretty clearly that, at least when it comes to
central bank reserves, it's not just the position of the MD line that can change, but its slope as well.
If so, and if you accept any part of the idea that injections of central bank money work via interest
rates and asset prices, this means that a given quantity of QE can have differing effects on
demand and inflation.
Let me start with the central bank's balance sheet, taking the latter two points together. I'll then
circle back and discuss briefly the behaviour of the demand for broad money.
The demand for central bank money. In March 2020, when the world was struck by the
pandemic, there were violent moves in prices of financial assets, volatility rose sharply and market
liquidity - the preparedness of financial institutions to provide short-term credit - dried up. In order
to meet margin calls on derivative positions many investment firms were required to sell even safe
assets (government debt). Whatever the underlying vulnerabilities that fed it, this "dash for cash"
can be thought of in this context as a sharp increase in the demand for central bank money[10] - in
Chart 9, a rightwards shift in the MD line. Though the particular circumstances were different each
time I think you can characterise the conditions in early 2009, and again during the LDI crisis last
October, in a similar manner.
Meeting such demand - matching the rightwards jump in MD with a similar shift in MS - is not
monetary easing: it's the forestalling of a market-induced tightening of monetary conditions.
Without that matching supply, bond yields would rise, asset prices would fall and aggregate
demand and inflation would weaken (in the IS-LM model, an unmet rise in the demand for money
pushes the "LM" curve to the left). And it's one reason why, in the data, you'd expect - at least
occasionally - to see shifts in central bank money that are not then followed by stronger demand
and inflation[11]. It also suggests that, rather than just their size, a more accurate measure of the
impact of asset purchases is what they do to bond yields. Combined, and by design, the dual
shifts in Chart 9 would leave those yields unchanged.
This conclusion is all the stronger once you recognise - as seems to be the case in the data - that
the MD line is subject to shifts not just to its position but also in its slope. The effects on bond
yields of a given quantum of asset purchases appear to vary. In particular, it seems to be exactly
during these episodes of acute market illiquidity - the three I singled out are circled in Chart 10 -
that these purchases seem to have been the most effective at tempering any rise in yields.
Chart 10: Asset purchases seem to have larger effects when markets are illiquid
Sources: Bloomberg Finance L.P, Refinitiv Eikon, Reuters and Bank of England calculations. Chart shows the change in 5-
25 year gilt yields, averaged across maturities, over two-day windows around announcements (see Joyce et al (2011) ),
except when there are confounding events within this window. October 2011, February 2012, and March 2020 use a
narrower window, as MPC announcements coincided with other central bank announcements or major political news.
Purcha