pick - up. and i think this prognosis is consistent with our inflation report central projection of bis central bankers ’ speeches a gentle, albeit sustained, recovery over the next three years. that is a somewhat sobering, but not calamitous, outlook for real growth. most of the economic problems we face will be eased as growth recovers but, in my view, a return to boom conditions is unlikely in the uk anytime soon. if that is the outlook for growth, then what about inflation? that has been above target now for most of the past five years. but it would be hard for anyone to argue that inflation has been high because of excess demand growth in the uk. and because monetary policy works in large part by boosting or restraining nominal demand that would not seem to be the root cause of such high inflation either. rather we have been subject to a range of cost or supplyside shocks including high energy prices internationally, compounded by the large depreciation of sterling during the financial crisis, and tax changes and other “ administered ” or regulated price rises reflecting difficult policy choices ( such as producing cleaner energy ). as a relatively small open economy, overly dependent on financial services, the uk has been more exposed than most countries to externally - driven cost pressures. it may sound perverse, but my concern for much of the past five years has been the risk of eventual deflation : that once the temporary effects of the various price level shocks work off, weak demand growth would leave us with a japanese - style economic malaise which would have been very difficult to escape from. the asset purchase programme – or qe as it is generally called – has been crucial in avoiding that outcome. during the recession we have been trying very hard to stimulate the economy – but always with an eye on inflation returning to the 2 % target in the medium run, as we are required to do. if qe has contributed to inflation still being somewhat over - target at around 2 ½ % now, that seems to me a much better outcome than the alternative of a deeper recession and a greater risk of deflation. we have had our critics over the past few years and an open debate on monetary policy is to be welcomed. but i have not heard anyone suggest a more convincing or attractive policy stance for monetary policy than that which we have pursued. the question now is what we should do with monetary policy as these shocks work their way out of the system. it feels as if monetary policy has

years, confidence recovers and business investment starts to grow strongly. but pay growth and hence incomes respond much less, reflecting in part the fact that productivity growth does not recover. and, in the latest chapter, just as we see signs of income growth and productivity growth coming back into life, a deflationary shock from a collapse of oil prices, which should boost the economy, allied to a slump in emerging markets, pulls us back and the economy begins to slow. markets worry that the next chapter will be another unfortunate event. i would call this the “ slow healing ” story. recoveries from financial busts tend to be slow and painful. indeed, that is why it is worth doing all that you can – in advance and in good times – to avoid financial crises. the academic literature suggests it takes an average of eight years to recover. 2 if in the meantime you are hit by other bad surprises it can take longer. and in this “ a series of unfortunate events ” is a series of children ’ s novels written by daniel handler ( using the pen name of lemony snicket ). this finding refers to recovery in real per capita gdp to its pre - crisis level rather than to making up lost output relative to precrisis trends. see reinhart, c. m., and rogoff, k. s. ( 2014 ) “ recovery from financial crises : evidence from 100 episodes ”, nber working paper no. 19823. reinhart and reinhart ( 2015 ) report that ten years after the fifteen worst financial crises of bis central bankers ’ speeches story most of the events are related. as many commentators have observed, as well as country - specific factors, many of the stresses now seen in emerging markets are knock - on effects, if not from the financial crisis itself, then from the responses to it in the post - crisis recession. one can tell a version of this slow healing and unfortunate events story for the world economy as well as for the uk. you can see that reflected in the imf ’ s forecasts for world growth. in every one of the last five years the world economy has underperformed the forecast. 3 indeed it has pretty much become an annual event that the world economic growth forecast is downgraded as stresses emerge somewhere in the world economy or there are serial disappointments on pay and productivity. this is not to denigrate the imf ’ s forecasters. you see the same effect in the bank ’ s