Conclusion Behavioural biases afflict us all, in every activity from setting concrete to setting interest rates, from stress-testing steel to stress-testing banks. Central banks cannot be immune. Because central banks’ judgements affect society at large and in large ways, it is important there are institutional means of safeguarding against these biases. The Bank of England’s new policy framework is part of the response to that challenge. By design, it contains institutional safeguards against many of the biases most important for UK monetary and financial stability. But it is early days. In developing this framework further, three principles will be important – recognition, research and revision. Because behaviour biases are often unconscious, recognising them is crucial for building robustness. Put differently, denying their existence is proof of their importance! Research can help in identifying and understanding these biases and assessing institutional means of leaning against them. The Bank hopes to make a real behavioural change of its own on the research front in the years ahead. Armed with that research, the Bank should be better-placed to make revisions to policy. Historically, flexing policy frameworks has often been taken as a sign of regime failure. Quite the opposite ought to be the case. If the Bank’s policy machine is to be robust over time, it will need to evolve and flex. If central bank regimes are encased in glass, they are apt to shatter when next hit by a falling Rock. 64  Stockton (2012) also reaches this conclusion.

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