to developments in energy and other commodity prices. i have set out the reasons why we expect this rise in inflation to be a temporary feature of the bounce - back. the reasons for taking this view are well - founded, it is not a vain hope or a matter of whistling in the wind. it is important not to over - react to temporarily strong growth and inflation, to ensure that the recovery is not undermined by a premature tightening in monetary conditions. but it is also important that we watch the outlook for inflation very carefully, which of course we do at all times, particularly for signs of more persistent pressure and for a move of medium term inflation expectations to a higher level. and if we see those signs, we are prepared to respond with the tools of monetary policy. over the last sixteen months we have used monetary policy decisively to respond to an unprecedented crisis which was disinflationary. we were able to act in this way because the framework of monetary policy and the record of its use are robust. this credibility gave us the scope to act in a crisis. history has many examples of ineffective policy actions by weak institutions, and they don ’ t end well. our credibility and institutional resilience were hard won. next year marks the 25th anniversary of the mpc and the adoption of the objective of price stability. memories of the instability of the previous approaches may be fading with the passage of time. i can assure you lord mayor that our focus will remain firmly on taking the actions that are required to maintain price stability over time. thank you. i am grateful to sandra batten, jamie bell, lucio d ’ aguanno, andy haldane, jonathan haskel, andrew hauser, karen jude, simon kirby, clare macallan, rebecca maule, nick mclaren, michael saunders, fergal shortall, sophie stone, silvana tenreyro, jan vlieghe and carleton webb for their assistance in helping me prepare these remarks. 1. victoria beckham cuts dress prices to ‘ future - proof ’ fashion brandopens in a new window 5 / 5 bis central bankers'speeches

##e, we should use policy more actively to ‘ lean against the wind ’ – to discourage and dis - incentivise any build - up of expectations that appear to have formed irrationally. see carney ( 2019 ) for an illustration of some key indicators for a range of major economies over the past four decades. see, for example, bridges et. al. ( 2017 ) which looks at a sample of 130 downturns since the 1970s, across advanced economies while it finds some evidence of a role for the level of indebtedness, credit growth is found to be a more significant predictor, with rapid credit growth predicting worse recessions : longer with lower gdp per capital, higher unemployment, and more lost productivity. all speeches are available online at www. bankofengland. co. uk / speeches all of this, perhaps, seems very theoretical compared to your essay question of “ what will be the next great financial crisis? ” so i will try now to relate some of these issues to our current assessment of financial stability risks facing the uk. uk conjuncture the most prominent short - term risk facing the uk today of some financial sector correction is the possibility of an extremely disorderly brexit. such an outcome may not be what we expect to happen or what is likely to happen but rather the worst possible case. the risk has not been generated by the financial sector. but, if it occurred, it would almost certainly lead to a correction in uk asset prices and losses for uk banks. the task of the fpc has been to ensure that such a correction, were it to occur, would not lead to a uk financial crisis. we have tested the banking system to equal and greater stresses to give us the confidence that while losses would occur, unlike 10 years ago, the system would have the capital to absorb them. we have required the banks to hold liquidity, in the currencies that they would need, to withstand a liquidity stress greater than that experienced in the financial crisis. and the bank stands ready to provide liquidity in all major currencies. and, with other uk authorities, we have ensured that regardless of the brexit outcome there should not be disruption to the provision of financial services in the uk by eu firms. the financial stability reports of the fpc over the past 18 months have set out the actions that have been taken. the record of the financial policy committee ’ s february meeting, published earlier this week, makes