Brexit and interest rates
Speech given by
Ben Broadbent, Deputy Governor Monetary Policy
London School of Economics
15 November 2017
I'd like to thank Mette E. Nielsen and Konstantinos
Theodoridis for their valuable research assistance.
I am also grateful for helpful comments from other colleagues. The views expressed are my own and
do not necessarily reflect those of the Bank of England or other members of the Monetary Policy
Committee.
Introduction and summary
Hello! It's a It's a I'm fortunate to have
real pleasure to come to the LSE to give this talk. great institution;
last, but not least, it's barely a hop and a skip from my
many friends here; office. So thank you for having
me.
It won't have escaped your attention
that the MPC raised interest rates earlier this month. It did so, in part,
decline in sterling's exchange
because of the referendum-related rate. That has pushed up CPI inflation and
will continue to do for some time yet, as the rise in import costs is passed through to retail prices. Our remit
says we can accommodate such effects, and take our time in bringing inflation back to target, but only so
long we also think there's spare capacity in the
economy. As unemployment has declined that position has
become harder to maintain.
We've been communicating this message for some time now. The MPC explained over a year ago that
there were "limits to inflation [could] be tolerated" and that those limits
the extent to which above-target
depended on the degree of spare capacity in the economy. In March, eight months ago, it said in its
Summary that, if demand growth remained resilient, "monetary policy may need to be
Monetary Policy
tightened sooner" than the market expected. Similar points were made in the intervening months.
Yet, even as inflation rose, and the rate of unemployment fell further, interest-rate markets continued to
under-weight the possibility that Bank Rate might actually go up this year. Chart 1 plots the cumulative
change in the three-year sterling interest
rate, over the past year or so, against what
Chart 1: Interest-rate markets relatively unresponsive
you might have expected to happen (based
to upside surprises in economic data through 20171
on historic correlations) given the pattern of
data surprises.
There is always room for judgement about
any individual interest-rate decision and not
everyone on the Committee agreed with this
one. After a long period of weak wage
growth there's certainly room for doubt, or at
least caution, about the inflationary impact of
lower unemployment. (For my part I think
Sources: Bloomberg, Tradeweb, and Bank calculations.
the evidence is still consistent with such an
inflationary effect and I will say something about this later on.)
1
Cumulative changes in UK 3-year nominal spot rates. The predicted values are from a regression of daily changes in UK 3-year
nominal spot interest rates on near-term surprises in economic data, from the UK and a range of other countries.
one thing that tempered the market's reaction to
That uncertainty about wage formation may have been
stronger-than-expected economic data. But I suspect there was something else at work as well - and that's
There's been a persistent strain of opinion that EU withdrawal is something that necessarily
Brexit. means
lower interest rates, or at least that it's a reason to avoid putting them
up.
If so, then I think the belief has been overdone.
not that the opposite is I'm certainly not going to argue here that
It's true. interest rates will inevitably rise as
isn't the only show in
Brexit proceeds. Apart from anything else, it town. Economic shocks come along all
the time, in both directions. For example, one of the things that has sustained the UK economy over the past
year or so, and to that extent contributed to the recent decision on interest rates, is the strength of the global
recovery. On a UK-weighted basis, the world economy looks to have grown by almost 3% in the year to Q3,
faster than for many years. This has nothing to do with Brexit and, if global growth were to falter, that too
would have implications for the UK.
However, my main point is that, given all the moving parts, even the marginal impact of EU withdrawal on the
appropriate level of UK interest rates is ambiguous. As the MPC said ahead of the referendum, in May 2016,
the impact of a leave vote on monetary policy would depend on what it did to "demand, supply and the
exchange
rate". These pull in different directions: holding fixed the other two, weaker demand tends to
depress inflation and interest rates, declines in productivity and the exchange rate do the opposite. There
are feasible combinations of the three that might require looser policy, others that lead to tighter policy.
"Demand, supply and the exchange rate" can always move around
You might say this is true at any time.
and it's not as if
monetary policy makers can ever afford to ignore any of them. The MPC is always having to
think very carefully about the forces on aggregate spending; it generally has to form some sort of view about
underlying supply growth; it must always take into account the latest moves in exchange rates and other
asset prices.
It's
Furthermore, in the normal course of events these three things do not move independently of each other.
usually not valid to vary only one and imagine the others will stay constant. Exchange rates are volatile but,
over time, they often move because of news about domestic demand (Chart 2 plots smoothed series for
sterling's real exchange rate and
the growth of domestic demand). As for supply, identifiable news about
- we don't often see things that cause people to reassess their forecasts of trend
future productivity is rare
growth. In any case, it's often assumed that any changes in underlying supply are sufficiently gradual that
demand changes along with it, without the need for any prompting from monetary policy.
But the point we were trying to get across, when Chart 2: Demand and the exchange rate
we used that phrase, is that Brexit has the capacity
to move these things both significantly and, to an
unusual extent, independently of each other.
Today I want to pick out a couple of aspects of this.
One involves supply. As I say, economists often
presume that changes in an economy's underlying
If so, it's unlikely
productivity occur only slowly.
that any particular event - Brexit included - could
change one's view of
short-term trends in
underlying supply growth.
Sources: ONS, BIS, and Bank calculations.
But in one respect, at least, a sharp reduction in
the degree of openness could have a more immediate impact. Suppose, plausibly, it results in a sudden shift
away from what we've been exporting
in the demand for domestically produced output, and towards goods
and services we've hitherto been able to
import. If, as seems likely, resources in different sectors are highly
specialised - the physical and human capital suitable for one area aren't as productive in others - the effect
of this shift on aggregate supply is immediate. This is what the MPC was getting at when it said in the last
that a "reduction and reorientation of trade and supply chains...
Inflation Report may result in some existing
supply capacity becoming obsolete."
The second point involves the importance of expectations, something else the MPC has emphasised. At
least until the formal date of departure, and possibly for some time afterwards, the effects of Brexit will
depend centrally on what people expect it to do over the future. Those expectations are neither fixed nor
uniform - some people are optimistic about its effects, others less so. It's partly these differences in
expectations that can lead to independent moves in demand and the exchange rate.
the current inflation we're experiencing as the result in part of a more pessimistic
In particular, you can see
view of Brexit in financial markets - above all in the foreign exchange market - than among consumers.
-
This gap in expectations helps to explain why, in Chart 2, the latest figure for the real exchange rate the
-
diamond towards the right of the graph is well below the line for domestic demand growth. If the currency
market had been as sanguine as households sterling would not have fallen as far, if at all, and inflation of
import prices and the aggregate CPI would not have risen to the same extent. If, conversely, consumers
the currency market's more pessimistic view of the
shared future, domestic demand would have been
weaker and inflationary pressure would again have been lower.
Resource allocation and aggregate supply
Let me say a little more about these points, starting briefly with productivity. I want to offer a slight corrective
-
to a view I often hear that, were there any wider supply effects from Brexit things that either improve or
impair the UK's productive potential -
these could only come through very slowly, too slowly to have any
material bearing on monetary policy. The MPC typically concerns itself with policy horizons of 2-3 years. If
only implicitly, it often has to form a view about the economy's trend rate of growth over that period -
its
"speed
limit", in the language of the latest Inflation Report. But if any impact on potential output takes years
to come through, it's not clear that either the fact or the nature of Brexit should change those
short-term
estimates.
If you accept the way macro-economists often think about aggregate supply, this view makes sense.
-
Typically, potential output is divided into a contribution from the stock of capital how much physical
capacity there is in the economy - and something called "total factor productivity", or TFP. The stock of
capital is much bigger than the flow of new investment that adds to it, and it therefore evolves relatively
slowly. And, while TFP is a catch-all for all sorts of factors, many associate it with relatively slow-moving
On this basis it's hard to
things like the state of technological knowledge or average educational attainment.
- -
see how the overall rate of potential output growth and, a fortiori, our estimates of that trend could
change much over any short period of time.
-
Indeed, I think we can go further than this not only can the view that changes in supply are gradual make
sense in principle, I think it's usually true empirically as well. Over shorter-run cyclical horizons, most
That's why inflation tends to be
movements in economic growth appear driven by demand, not supply.
higher in upturns than downturns.
But that doesn't mean such short-term hits to productivity are inconceivable. We saw a sharp step down in
productivity growth after the financial crisis. And I think there are things involved in Brexit that, once one digs
below the macro-economic surface, could potentially do the same.
I'm thinking in particular of allocative effects. If EU withdrawal results in significant new barriers to trade
between the UK and its major trading partners in the rest of Europe, one plausible consequence would be a
marked shift in relative demand for UK output. The economy would probably experience less demand for the
things we've been exporting to the EU and more for goods and services we've
UK-based substitutes for the
tended to import.
That wouldn't matter much if the resources for one could be seamlessly and costlessly transferred to the
they're
other. In reality, however, those resources, human as well as physical, are likely to be specialised:
more productive in some areas than others. A plant used to produce a particular car part, as part of an
integrated European supply chain, cannot suddenly be converted into one that makes a complex German
currently producing barley, sold into the European market, can't easily or as fruitfully be
machine tool. A field
replanted with olive trees. Someone steeped in one particular area of financial services cannot overnight, or
costlessly, be reborn as an expert widget-maker, able to generate the same contribution to GDP. In the
presence of specialised inputs a significant shock to relative demand can have coincident and material
effects on aggregate supply.
The general lesson here is that "total factor productivity" doesn't
just depend on aggregate resources. To the
extent those resources are specialised it also depends on their allocation. I wondered some years ago
whether such effects were at work after the financial crisis2. Given the potential reallocative effects of any
material change in the UK's trading arrangements, it's conceivable they could arise in this case too.
Indeed it's possible they could arise the formal date of the UK's
even ahead of departure. In September/
October a CIPS survey of procurement managers suggested there could be significant unwinding of supply
chains through the course of next year: 40% of UK firms who currently use EU suppliers are actively looking
-
for domestic alternatives; the equivalent figure in the other direction the proportion of European
-
businesses expecting to move away from existing UK suppliers is 63%. A CBI survey in October found
contingency plans
that, in the absence of a transition deal, 60% of firms would begin to activate "worst-case"
by the end of March 2018, a full year before the UK's exit.
Chart 3: Reductions in supply can add to
It's true that incremental changes in underlying
inflationary pressure
productivity can have knock-on consequences for
wages, and for demand, that would blunt their impact
on inflation. If in aggregate firms are less productive,
they would probably spend less, including on pay
awards. But to the extent those knock-on effects lag in
any way, firms would also respond by raising prices. In
other words, reductions in supply can add to
inflationary pressure even as they also lower aggregate
GDP. Chart 3 is an extremely stylised description of
this effect.
2
Broadbent (2012).
Divergences in expectations: why demand and the exchange rate can move independently
Let me now turn to the point about expectations. This is of particular relevance for the current inter-regnum,
the period following the referendum but before Brexit itself. At least until the formal departure date what
- -
people expect of it is the main way arguably the only way in which it can affect the economy3.
not least because it's unclear how these
This is an obvious point. But I think we should pay it some heed,
If it's not a unique event Brexit is certainly an exceptional People haven't
expectations will evolve. one.
It's therefore reasonable to imagine that predictions about its consequences
much history to go on. might
vary over time: we will all of us learn more about its
Chart 4: Share prices of UK-focused
It's also understandable if these
effects as Brexit unfolds.
companies have underperformed4
expectations differ across the population.
It's clear that financial markets have relatively pessimistic
expectations. Since the referendum share prices of
UK-focused companies have significantly
under-performed both their international peers and those
of companies quoted in the UK but whose earnings come
from overseas (Chart 4).
Sterling's exchange rate has also fallen very sharply. As
Sources: Thomson Reuters Datastream and
I said in a talk earlier this year,5 I think this is because the
Bank calculations.
foreign exchange market has decided that leaving the EU
in the UK's tradable sector or
Chart 5: Simple theory says the saving rate will reduce productivity
raise its costs in some other way.
should rise in anticipation of weaker income
But it's far from clear that, as measured by their actual
spending patterns, expectations among households are
anything like as pessimistic. Chart 5 is an extremely
stylised representation of how, in the simplest models
used by economists, consumption responds to negative
news about future income. In this set-up consumers are
assumed to want to smooth their spending. Rather than
responding to every temporary up and down, they match
3
This is also true of the supply effects I discussed earlier: if supply chains were to unwind or firms to relocate before 2019 this would be
in response to their expectations of the new trading arrangements.
4
Ratio of prices to 12-month-ahead earnings forecasts. UK-focused defined as firms that generate at least 70% of their revenues here.
5
Broadbent (2017).
their spending to what they expect their average income to be over the future. As a result, anticipated
changes in long-run income should matter more than temporary fluctuations in current income. On this view,
someone who thinks his or her income will be persistently lower from tomorrow would reduce the level of
- -
spending today. In the interim until income actually declines the saving rate goes up. So the behaviour
of the saving rate should tell you something about how consumers expect income to evolve over the future.
Expectations of strong income growth lower the saving rate, a more pessimistic view does the opposite.
Now we know that, in the real world, there are reasons why consumption doesn't exactly behave like
this6.
We also know, from our own NMG survey of households, that there are many households who do say they
expect EU withdrawal to have a negative impact. Since September last year this biannual survey has
-
included three Brexit-related questions. One asks for your overall opinion do you think leaving the EU is a
good or a bad idea? (One would imagine the responses here are well correlated with what people actually
voted in the referendum; consistent with that, the households surveyed in September 2016 were more or
less split down the middle on this question.) The second asks about the impact of Brexit on the economy,
the third asks how households expect the referendum result to affect their spending.
They're
The balances on these last two questions are drawn in Chart 6. divided between those who
answered the first question positively, in green - let's call them the "leavers" - and the "remainers" in red.
Perhaps we shouldn't be too surprised by the first The "leavers" tend to foresee a
panel. positive economic
impact, the "remainers" the The "remainers" are apparently more uniform in their
opposite. answers: adding
them up, the balances in the aggregate sample are also negative.
What's striking, however, is that there's no
Chart 6: Even households who are negative
Brexit-induced cut in planned spending, even for the about Brexit do not plan to cut spending
"remainers". We need to be a little careful here, as
it's not clear whether people are telling us about their
If it's the latter
spending in real or in nominal terms.
then, allowing for inflation, perhaps some of the bars
might turn negative when measured in real terms.
But, on the face of it, there is very little
correspondence between people's views about the
economic impact of Brexit and their consumption
plans, and no anticipated response of spending for
the sample as a whole. Whatever the reason -
perhaps, given all the myriad uncertainties involved, Sources: NMG survey and Bank calculations.
6
The empirical research has demonstrated that, even if consumers do respond to expectations of future income, they are more
sensitive than the simple theory predicts to shifts in current income, even when these are identifiably temporary. For an extremely
readable account of the prevailing view of the evidence at the time, see Deaton (1992). For a possible explanation, see Carroll (2001).
people's - it's
professed expectations of Brexit are too imprecise to matter for current decisions apparent
from this survey that households have been relatively relaxed about the process, at least compared with the
- - households' effective
foreign exchange market. Measured by what really counts their consumption
expectations haven't shifted as much, if at
all.
The same is apparent in consumer confidence surveys, which are still close to historic averages (Chart 7),
and in the hard data. According to national accounts estimates the household saving rate has actually fallen
since the referendum (Chart 8) and consumption has continued to grow.
Chart 7: Consumer confidence7 Chart 8: Aggregate saving rate has fallen
Sources: GfK/EC, YouGov/CEBR, and Bank
For definitions, see the November 2017 Inflation
calculations.
Report, p. 10.
The resultant combination of a weak exchange rate and relatively resilient domestic demand, clearly
apparent in Chart 2, has had consequences for inflation. If the foreign exchange market had been as
sanguine as households, we would not have witnessed anything like the same rise in import prices, or the
import-sensitive parts of the CPI, that we have done. Conversely, the rise in inflation would also have been
had households' effective expectations been as pessimistic as those
smaller in the foreign exchange market.
The first point is illustrated well enough by recognising the importance of sterling's
Let me expand on this.
suggest that from the depreciation added around
depreciation for inflation. Our estimates "pass-through"
It's also had effects on demand, some positive, some
3⁄4% point to the CPI in the year to 2017 Q3. negative.
But I think it's safe to say that, without the depreciation, inflation would be
much closer to target. Other
things have also contributed the rise over the past year, notably the rise in oil prices. In May 2016, ahead of
7
The GfK/EC measure of headline consumer confidence shown in the chart uses the balances published by the European Commission
(which are seasonally adjusted, unlike the GfK data), but applies the same methodology as the GfK measure (which uses a different
aggregation than the European Commission's).
the referendum and prior to sterling's fall, the MPC's central forecast for inflation in 2017Q3 was below the
2% target.
-
The second point how inflation would also have been lower had households been as pessimistic as the
-
foreign exchange market is harder to get across, because you have to simulate the behaviour of
consumption. I'm going to try and do that with a simple economic model.
We'll imagine an economy that has two sectors -
one third of it produces internationally tradable output, two
- We're going to hit the
thirds non-tradable stuff between which capital and people can move costlessly.
economy with negative news about the future8. Specifically, we'll suppose that people suddenly learn that,
three years hence, productivity in the tradable sector is going to start to fall (relative to base). To fix the
numbers, we'll scale the hit so as to -
produce a material decline in the fair value of the exchange rate 10%,
say. Given the other parameters in the model, this requires an anticipated and overall decline in labour
productivity of around 8% in the tradable sector, 5% in the economy as a whole. The results of the
simulation are shown in Charts 9(a)-(h)9.
Because the foreign exchange market fully and correctly anticipates the productivity hit the depreciation
occurs immediately and does nothing further when productivity actually falls (9(b)). In the interim, the weaker
currency provides a big fillip to the tradable sector. Its sterling profits rise significantly and, for as long as
productivity holds up, this encourages a significant expansion in investment, employment and output (the
This is the "sweet spot" I referred to in the talk I gave about sterling earlier
green lines in 9(c),(d) and (g)).
this year.10
I should emphasise that there's nothing in this simple model that inhibits the response to this sweet
spot.
-
New investments are assumed to be costlessly reversible firms can easily get out of them once productivity
starts to decline - capital and labour can be easily moved from one sector to the other and there's complete
certainty about the timing and scale of that event. All this means that tradable output responds powerfully to
the depreciation and, on the demand side, net trade and investment grow significantly. In reality, perhaps
because there are significant frictions and uncertainties in the real world, the actual response of the tradable
sector has been much more modest (even though the fall in the exchange rate has been bigger than 10%).
8
The impact of news about the future on the current economy is an area of active research for economists. See, for example, Beaudry
and Portier (2006), Kurmann and Otrok (2013), and Kamber, Theodoridis and Thoenissen (2017).
9
The model used here is based on the model in Di Pace, King and Theodoridis (2017).
10
Broadbent (2017).
Chart 9a: Total factor productivity Chart 9b: Real exchange rate
Chart 9c: Investment Chart 9d: Hours worked
Chart 9e: Saving ratio Chart 9f: Consumption
Chart 9g: Output Chart 9h: Inflation
But there's also a significant difference in the predicted behaviour of consumption, this time in the opposite
direction. Because they agree about the coming hit to income, households cut their spending immediately in
- -
this simulation it falls 11⁄2% in the year after the news comes through and the saving rate goes up. This
dominates the sizeable response of net trade and investment, such that aggregate demand and output also
decline. As a result the response of inflation is relatively muted. It still rises, thanks to the weaker exchange
rate. But it does so by only 0.5% points, significantly less than we've seen over the past year or so. With
output declining and inflation close to target it's not clear the MPC would have wanted to raise interest
rates.
The point that comes across, for me, is that inflation would be lower had effective expectations of the
implications of Brexit, across different parts of the economy, been more uniform.
I'm not saying - - is "wrong" or
Let me be clear. one side or the other households and financial markets
We don't yet that for as long as we don't know the ultimate Brexit
"right". know. My points are rather (i)
outcome, it's understandable that expectations should differ and (ii) that the particular difference we've seen
since the referendum, with the foreign exchange market more pessimistic than the real economy, has been
inflationary, and the gap in expectations has therefore been an important contributor to the recent rise in
inflation and therefore interest rates.
A corollary is that at least until Brexit actually happens, its significance for inflation and interest rates derives
not so much from the process itself but from whether those expectations move closer together or further
apart. However it occurs, whether via a stronger exchange rate or weaker consumption, a degree of
reconciliation would tend to lower inflationary pressure. Further divergence would do the opposite. I think
it's hard to predict which of these is more likely.
don't forget productivity
Some remarks about wage growth and unemployment:
One consequence of being uncertain about supply growth, for a monetary policy maker, is that you begin to
- it's no longer so clear what constitutes a "strong" or a
rely somewhat less on indicators of economic growth
"weak" GDP print, relative to underlying productivity -
and instead put more weight on direct measures of
spare capacity, such as unemployment.
that's advisable only to the extent you trust the link between unemployment and wage
However, growth. In
"Phillips curve", low unemployment is
recent years, many seem to have lost that trust. According to the
meant to push up wage growth. Yet here we are with unemployment at a four-decade low and wages still
growing at a rate well below the historical average. As a result, several commentators have questioned the
MPC's
central prediction that wage growth will rise next year. Some have gone further and pronounced the
death of the Phillips curve.
There are always risks to any forecast. But the latter claim, at least, is premature. Using annual data, Chart
10 plots UK wage growth, less expected inflation, against the rate of unemployment - the UK's Phillips
curve. The blue dots cover the first twenty years of inflation targeting, till 2012, the red dots the five years
since. The estimated regression line has clearly shifted to a lower position since the crisis and the period of
weaker productivity growth that has ensued.
However, if people come to accept the implications of that weaker productivity trend for the real wage
- the "norm" for real pay growth being one thing that determines the
increases they can expect to receive
- that's precisely what you'd expect to
position of the Phillips curve see. It would also shift leftwards if
structural improvements in the labour market had lowered the equilibrium rate of unemployment. The MPC
reduced its estimate of that equilibrium rate, from 5% to 41⁄2%, in February.
real time, as it's happening, it's statistically
In
Chart 10: Phillips curve: down but not out
difficult to distinguish a shift from a flattening and
there is clearly room for caution about our
forecasts for growth of wages and unit costs.
But, over time, I think the evidence looks more in
favour of the former. The curve still seems to have
-
a slope all else equal, a tighter labour market is
likely to mean faster wage growth.
Conclusion
Sources: ONS, Bank of England, and Bank
calculations.
I was in Aberdeen earlier this year and, when
asked by a wily reporter what I planned to vote at
the question by referring to a number of
the following MPC meeting, fobbed off "imponderables"11.
I've talked about some of those
today. The combination of low unemployment and weak wage growth might
We've
qualify as one, but I think low productivity growth can explain quite a bit of that particular puzzle. had
only limited data since productivity flattened out, a few years ago, and if you estimate a Phillips curve only
over that period the resulting estimates are bound to be imprecise. But, to my mind, the basic judgement in
the MPC's - -
forecast that, for given productivity growth, less slack leads to faster wage growth still looks
reasonable.
11
Some people came back to me claiming this wasn't a word. It is. Those readers who've got this far deserve some light
relief. Thanks
to the wonders of technology I found a long list of "imponderables" on the internet, compiled by an engineer in New -
Mexico see
I don't know that these are any more or less insoluble than the impact of Brexit on interest
http://www.unm.edu/~jerome/imponder.htm.
rates, but they're certainly (at least) as entertaining.
The effects of Brexit on inflation, and ultimately on the appropriate level of interest rates, are altogether more
uncertain and more complex. They're certainly too complex to justify the simple assertion that Brexit
necessarily implies low interest rates. The MPC eased policy in August 2016 not because of the referendum
result but because of the steep fall in measures of business and consumer confidence that followed it. We
made the judgement that the risks to demand were such that, even allowing for the weaker exchange rate
and any immediate effects on supply, Bank rate should be reduced.
But there's no I've described
inevitability about the balance of these effects. how the current inflation is in
part the result of a divergence between the effective expectations of consumers and those in financial
markets. If those expectations were to re-converge, from either end, inflationary pressure would diminish. If
Firms' expectations will affect their investment
they diverge further the opposite would happen. and
purchasing decisions, and these in turn can have an impact on productivity. Some of those effects could
come through faster than people often assume. If they do, then even the argument that Brexit lowers growth
interest rates isn't watertight. And, to add something else to these risks, something I haven't
and therefore
dealt with in this speech, a sudden switch to WTO trading rules would involve the immediate imposition of
tariffs on imports, further raising their cost.
Predicting others' predictions isn't easy, and I don't think the balance of risks to inflationary pressure, and
therefore future interest rates, is obvious. In the meantime, the MPC has little choice, it seems to me, but to
To adapt the football manager's cliché, we can only play the economy
take the economic data at face value.
that's in front of What's been in front of us for several
us. months is an economy with above-target inflation
and dwindling spare capacity. That's why I think it was the right thing to remove a degree of monetary
- -
accommodation. And while things might change they always do we will continue to act in a way that
ensures stable inflation over the medium term while still providing what support we can to jobs and economic
activity.
Thank you.
References
(2006), 'Stock prices, news, and economic fluctuations',
Beaudry, P. and Portier, F. American Economic
Re