by the mpc makes that support explicit. the primary objective of monetary policy remains the 2 % inflation target. the sanctity of that objective is guarded by the two price stability knockouts. but subject to those knockouts and the knockout pertaining to financial stability, our guidance clearly signals the committee ’ s intention to maintain a highly stimulatory stance of policy until the economy returns to something closer to normality. abstracting from the precise details of the thresholds and knockouts, the message to businesses and families should be clear. the mpc intends to keep interest rates low until we have seen a sustained period of strong growth, rising incomes and higher employment, as long as that does not pose risks to either price stability or financial stability. to be clear : that is no different to the approach underlying our policy over the past five years. but forward guidance provides a framework and a language in which that intention can be made plain. a closely related issue is the policy trade - off currently faced by the mpc. with inflation well above target and the level of output still depressed, the committee has to balance the speed bis central bankers ’ speeches with which it returns inflation to target and the support it provides to output and employment. if we attempt to return inflation to target too quickly, by withdrawing monetary stimulus, we risk undermining the fledgling recovery. but returning inflation to the target too slowly might cause people to question the mpc ’ s commitment to keep inflation close to 2 % in the medium term. again, the issue here is to do with the transparency and accountability of policy, rather than its actual setting. the need to juggle these two challenges – returning inflation to target and supporting growth – has been the single most important determinant of our monetary policy decisions over recent years. but an inflation target, on its own, is not well suited to explaining the judgements and rationale underlying the committee ’ s approach. put bluntly, it speaks to only one half of the trade - off. the stakes are high. our management of the trade - off between returning inflation rapidly to target and supporting the recovery directly affects businesses and families up and down the country. it is only right that the committee be clear about its view of the appropriate trade - off so that we can be challenged and held to account. indeed, a noteworthy addition to the mpc ’ s remit when it was renewed by the chancellor earlier this year was a request that “ … the committee should promote understanding

period, with potentially damaging effects on the longrun health of our economy. the design of the forward guidance – in particular the combination of the unemployment threshold and the knockouts – makes the setting of monetary policy more robust to this uncertainty, allowing the committee to learn about the responsiveness of supply as the economy recovers, without needing to work out the precise cause of the productivity weakness up front. 5 let me explain. if productivity picks up strongly as the recovery gathers pace - as the more optimistic reading of the evidence would imply – this means that we are likely to have a relatively prolonged policy is not being set with particular reference to the unemployment rate ; rather the threshold simply provides a convenient point at which to reassess the stance of policy. monetary policy continues to be set on the basis of a wide range of variables affecting the outlook for growth and inflation. see, for example, miles ( 2012 and 2013 ) and mccafferty ( 2103 ). see, for example, broadbent ( 2011, 2012, 2013 ). my fellow mpc member paul tucker recently referred to this as a “ probing strategy ” ( tucker 2013 ). bis central bankers ’ speeches period of strong growth, and a relatively prolonged period of low interest rates, before unemployment reaches the 7 % threshold. but if, even as the recovery gathers pace, productivity growth remains relatively muted, unemployment will likely fall more quickly and the committee will need to raise rates sooner. a threshold defined in terms of the unemployment rate is particularly well suited to dealing with this uncertainty. as demand picks up, those companies that can use their existing workforces more intensely or can shift employees to more productive activities are likely to do so before hiring additional staff. this suggests that to the extent that productivity picks up in response to increasing demand it should largely do so before unemployment falls materially. as such, the committee can remain largely agnostic about the extent to which productivity is likely to pick up and instead respond to the signal provided by movements in the unemployment rate. 6 at the same time, the three knockouts make clear that the committee will continue to pursue such a policy only if it does not pose a risk to price or financial stability. its levels that matter the second challenge relates to the need for the committee to explain how monetary policy is likely to evolve as the economy recovers. the good news is that after several years of virtual flat - lining, a recovery appears to be taking hold. the uk economy grew by over 1 %