I The Changing Policy Landscape, Federal Reserve Bank of Kansas City Jackson Hole Symposium, 2012. Dynan, Karen (2012), Is a Household Debt Overhang Holding Back Consumption? Brookings Papers on Economic Activity, Spring 2012. Eichengreen, B., M. El-Erian, A. Fraga, T. Ito, J. Pisani-Ferry, E. Prasad, R. Rajan, M. Ramos, C. Reinhart, H. Rey, D. Rodrik, K. Rogoff, H.S. Shin, A. Velasco, B. Weder di Mauro and Y. Yu (2011), Rethinking Central Banking, Brookings Institution. ESRB (2014), The ESRB Handbook on Operationalising Macro-prudential Policy in the Banking Sector . European Systemic Risk Board. Geanakoplos, John (2009), The Leverage Cycle. Cowles Foundation Discussion Paper No. 1715. Gungor, Sermin and Jesus Sierra (2014), Search-for-Yield in Canadian Fixed-Income Mutual Funds and Monetary Policy. Bank of Canada Working Paper 2014-3. Haldane, Andrew (2010), The $ Billion Question, speech on 30 March 2010, Bank of England. H M Treasury (2013), Review of the monetary policy framework. March 2013. Ingves, Stefan (2010), Monetary policy and financial stability – some future challenges. Speech at the Swedish Economics Association, Stockholm, 17 May. Jauch, Sebastian and Watzka, Sebastian (2013), The Effect of Household Debt Deleveraging on Unemployment Evidence from Spanish Provinces. Conference paper, Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung. 16  BIS central bankers’ speeches  Kamin, Steven B. (2010), Financial Globalization and Monetary Policy, International Finance Discussion Papers Number 1002, Board of Governors of the Federal Reserve System. Klein, Michael W. (2012), Capital Controls: Gates vs Walls. Brookings papers on Economic Activity, Fall 2012, 317–355.

Some have argued that this was due to lower and less volatile shocks hitting the UK economy (Benati and  6  BIS central bankers’ speeches  inflation will be returned to target more slowly that would harm the efficient functioning of our economy. Wage and price setting behaviour could change. The task of keeping inflation close to target would become more costly. Inflation persistence would increase. We need to guard the gains in credibility built up over the past 15 years or so. How is the current stance of policy consistent with the inflation outlook? The existence of these upside risks leads to the fourth and final charge levelled against the MPC. Is the current stance of policy consistent with the inflation outlook? As I’ve explained, the central view of the Committee – which I share – is that much of the current strength of inflation is driven by a series of price level shocks. Inflation is likely to fall back next year, as the temporary impacts from these factors wane and the persistent slack in our economy continues to pull down on inflation. That outlook drives the current stance of monetary policy. Policy needs to remain highly accommodative in order to support spending and income and so reduce the risk of inflation significantly undershooting the target in the medium term. But there is considerable uncertainty about the extent to which inflation is likely to fall and over what time period.