A third factor is that the fracturing of supply chains during the Covid crisis, national and international, would tend to increase the cost of goods and services, if it proves durable. Against these inflationary forces of course needs to be weighed the disinflationary effects of much higher degrees of (double jeopardy) uncertainty, weaker demand and potentially higher saving rates in the economy. With heavy weights on either end of the inflationary see-saw, it is unclear at this stage which will tip the balance. Those uncertainties are, to some extent, reflected in the differing responses of agents’ inflation expectations. Since the crisis, households’ expectations have tended to drift up, companies’ expectations have drifted down and financial markets’ expectations are relatively unchanged. Given the strong forces acting on inflation in either direction, the MPC is being especially vigilant in monitoring trends in inflation expectations. Perhaps the long-range forecast about which I have greatest confidence concerns the data and statistics used, by the Bank and others, to monitor the economy. The emergence of a new suite of fast indicators, including from the UK Office for National Statistics, has significantly shifted the technological frontier when monitoring the economy. That shift is likely to be permanent, improving the granularity and the timeliness of both our statistics and our understanding of economic trends. The Policy Response  Let me conclude by discussing the policy response to these searing developments in the global economy. Like the crisis itself, these responses have been unprecedented in speed and scale.

Moreover, in our opinion, over the period of its gradual termination, this anti-crisis measure may still be preserved first and foremost in the regions facing a shortage of supply where prices have not risen significantly, since a considerable number of regions have confronted a situation where price growth has already exceeded the positive effect of the mortgage rate reduction. Therefore, we consider that this measure should be more targeted in order to really achieve its goal of making housing more affordable for people and avoid overheating in the housing market. As regards ongoing preferential lending programmes, we should have them and did have them before the pandemic. In our opinion, there is a potential for these permanent preferential programmes to be expanded — not for anti-crisis but for permanent ones. They may also be regional, that is, programmes may be supported in those regions where this is not so profitable for construction companies to build these projects and they earn low margins. Therefore, it is necessary to select the regions that could have such ongoing measures supporting construction through either mortgage lending or any other mechanisms. The second aspect is social programmes. For instance, we can see that the preferential programme for young families is not highly requested, and the amounts under this programme are not that large. This is why we believe that the criteria for providing support may be expanded in this regard, including for young families in general, while interest rates may be subsidised depending on the number of children in a family.