And as a purely non-traded good, housing isn’t affected as directly as business capital by the prospective changes in the UK’s terms of trade. So any impact of greater uncertainty may on this occasion take longer to come through. But I fear I’m already straying into the temptation I’ve warned against, to over-interpret incoming data. The wiser course is to wait for the November Inflation Report, which gives us a good opportunity to reflect more systematically on the news since August, and what it implies – if anything – for the medium-term outlook. Thank you. 13  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  13  References Bank of England, 2016, August 2016 Inflation Report, http://www.bankofengland.co.uk/publications/Documents/inflationreport/2016/aug.pdf Bank of England, 2012, “The distributional effects of asset purchases”, Quarterly Bulletin, 2012 Q3, http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb1203.pdf Bean, C., 2012, “Pension funds and quantitative easing”, speech given to the National Association of Pension Funds’ Local Authority Conference, http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2012/speech573.pdf Bernanke, B., 2015, “Why are interest rates so low?”, Brookings, https://www.brookings.edu/blog/benbernanke/2015/03/30/why-are-interest-rates-so-low/ Bloom, N., 2009, ‘The impact of uncertainty shocks’, Econometrica Broadbent, B., 2013, ‘Forecast errors’, Speech given at The Mile End Group of Queen Mary, University of London Broadbent, B., 2014, “Monetary policy, asset prices and distribution”, speech given at the Society of Business Economists Annual Conference, http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech770.pdf Dixit, A. and R.S. Pindyck, 1994, “Investment Under Uncertainty”, Princeton University Press Haddow, A., C. Hare, J. Hooley and T. Shakir, 2013, ‘Macroeconomic uncertainty: what is it, how can we measure it and why does it matter?’, Bank of England Quarterly Bulletin.

12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  Chart 14: Surveys of business investment  Chart 15: Housing market indicators have  intentions have weakened  recovered  Source: Bank of England, BCC, CBI, CBI/PwC, Markit/CIPS and  Source: RICS survey and ONS  Bank calculations  But if I had to pick out three possible candidates, one would be the underlying momentum in domestic demand, which now looks to have been stronger than we thought at the time. Another could be the speed with which sterling’s depreciation, and the more general easing in financial conditions, have supported the economy. The foreign exchange market attempts to price long-run risk and, to my mind, the currency fell after the referendum for fear of what the result might ultimately mean for the UK’s access to global markets. But if that is a risk for the longer term, once the UK’s new trading arrangements come into force, those arrangements are for the time being unchanged. Against that backdrop, the fall in the exchange rate will help to support activity, cushioning the impact of greater uncertainty. While that was expected, the effect could be coming through faster than we’d anticipated. Finally, the near-term impact on housing activity may be more moderate than we feared (Chart 15). Because it’s a highly durable asset, investment in housing should in principle be subject to the same swings in uncertainty that affect business spending. But housing activity is in general well correlated with consumption, which is holding up better.