doubt i do want to highlight that every economic forecast i ’ ve ever been involved in, in the course of a long career, has involved some judgement. that said, the range and overall weight of judgements in recent mpc forecasts is significant and reflects the very unusual, shock heavy recent economic history of the uk8. sources : bloomberg finance l. p., citigroup, ons, yougov and bank calculations. ( a ) the projection line ( swathe ) represents a range of projections from three statistical models of nominal private sector regular average weekly earnings growth, including a wage equation based on yellen ( 2017 ), a wage equation based on haldane ( 2018 ) and a simple error - correction model based on productivity, inflation expectations and slack. the slack measure for these models is based on the mpc ’ s estimate of the unemployment gap. the projections are dynamic, multi - step ahead forecasts beginning at a point within the models ’ estimation periods and are sensitive to data revisions, which can lead to changes in the swathe over the past as well as over the forecast period. 8 see recent experiences in macroeconomic forecasting - speech by huw pill ( bankofengland. co. uk ). bank of england turning to the specifics of our judgements, on the demand side we built greater resilience in demand than our forecasting models would suggest ( though slightly less in november 2023 than we incorporated in the august 2023 mpr ). second for a given negative impact on activity we have assumed less of an upwards movement in unemployment than we have seen historically – which translates into a smaller okun coefficient - with knock - on effects on inflation. finally, given developments in wages over the last year we have assumed more persistence in wage - setting than the determinants of wages in our various models of wages would point to. this in turn could stem from various labour market factors, which has led us to revise up our estimate of the medium term equilibrium unemployment rate to 4. 5 % 9. chart 5 shows that this judgement pushes wage growth over 1 % above the top of the swathe produced by our three main models. as the degree of uncertainty has increased in recent years the mpc collectively and individually have put more and more weight on scenarios in thinking about and communicating our positions10. this year alongside modelling various alternative futures, our forecast rounds have been informed by a range of cross - checks to the forecast. on

of central bank communication in the conduct of monetary policy and assess both its benefits and limitations ; • second, i will discuss the appropriate content and means of monetary policy communication, with reference to the practice and experience of the european central bank ; • third, i will address an issue which has received much attention recently, but which continues to be controversial, namely the potential usefulness of announcing the likely future path of future policy interest rates ; and • fourth, i will assess the available empirical evidence about the effectiveness of the ecb ’ s communication policy and conclude by highlighting two issues concerning central bank communication and policy effectiveness. ii. role and importance of monetary policy transparency and communication it is generally agreed that a high degree of transparency and an effective communication of policy are necessary for the successful performance of central bank tasks. several arguments and a wealth of empirical evidence support this proposition. at a fundamental level, increased transparency is a key element of the greater accountability that accompanies central bank independence. in other words, a high degree of transparency is essential for safeguarding the democratic legitimacy of independent central banks. at policy level, increased transparency and good communication about the objectives, the policy strategy, assessments and decisions of a central bank can contribute to policy effectiveness and market efficiency. this is the reason why most central banks have steadily exceeded the accountability standards required by law and have become more open and improved their communication. good communication can enhance policy effectiveness by influencing expectations and by reducing uncertainty. expectations of future developments and policies influence the actions of economic agents and, consequently, help determine current economic conditions as well as aggregate output and price dynamics. inflation expectations, in particular, are a key determinant of wage and price - setting and of the concomitant dynamic adjustment of employment and output. moreover, expectations of inflation and of the future path of shortterm ( real ) interest rates determine, given risks and liquidity premia, the longer - term interest rates that influence investment and consumption decisions and, ultimately, medium and longterm price developments. by communicating clearly its policy objectives and its strategy for achieving them and by explaining convincingly the rationale for its decisions – and their consistency with its objectives and strategy – a central bank can help anchor medium and long - term inflation expectations to price stability. the anchoring of expectations facilitates the preservation of price stability and improves the effectiveness with which monetary policy can secure this goal in the presence of shocks and in view of potential inflation risks. in this way, price stability can be