43  12  All speeches are available online at www.bankofengland.co.uk/speeches  12  Typically, the two sides of this argument are taken to be in a secular struggle: the dark forces of secular stagnation pitted against the dynamic forces of secular innovation. Yet in practice, both arguments have merit. They are certainly not mutually incompatible. It is perfectly possible to imagine a world of rapid innovation which nonetheless leaves large swathes of society in its slipstream. More than that, recent research suggests this is a likely outcome of the Fourth Industrial Revolution. There are good conceptual grounds for thinking the displacement effects of the Fourth Industrial Revolution may be larger than ever-previously. Every industrial revolution has resulted in a hollowing-out, typically of mid-skilled tasks. Historically, that has meant largely manual, labour-intensive tasks. Machine has replaced human in activities that are routine and repetitive. The future could well be very different. For example, the dawning of AI means that humans will no longer have the cognitive playing field to themselves. Thinking or non-routine tasks may increasingly be taken up by machines. They will be able to process more quickly, more cheaply and with fewer errors than their human counterpart, at least in some activities. That could make the hollowing-out of human tasks, now cognitive as well as manual, far greater than ever before. 48  A cottage industry has emerged over recent years manufacturing estimates of job loss that might result from 49  this rise of the robots.

At the second stage, we will arrange consultations with the professional community, including financial market representatives, companies, independent analysts, and researchers. Now, I would like to focus on challenges to the economy in a broader context. By the moment, the economy has almost recovered to its pre-crisis level. Today, the key question is about the pace of post-pandemic growth and the drivers that would promote a faster than 1.5–2% annual growth rate (this was our pre-pandemic estimate of potential growth). We believe that, by bringing inflation back to the target, our monetary policy will serve our longterm development goals. Indeed, monetary policy does not influence economic potential. However, it creates prerequisites 2/7  BIS central bankers' speeches  for investment that would improve labour productivity and relocate resources to the industries of tomorrow. The chief result of the inflation targeting regime is that we have managed to decrease the socalled inflation premium and, accordingly, the level of long-term interest rates, thus improving the affordability of long-term financing. These are moderate long-term interest rates, rather than our key rate as such, that are vital for businesses’ investment plans. It is now crucial not to miss the momentum of changes — we need to support digitalisation and, simultaneously, raise labour productivity and reduce companies’ costs. The Government has launched large-scale infrastructure projects that should open new opportunities for businesses to implement really efficient projects. This is also essential given the energy transition that is set to take place.