prevailing real rates of interest and so accelerating recovery. 2 while not without insight on the mechanics of monetary stimulus, that stream of economic modelling makes the absolutely critical assumption that even as the monetary authority deliberately generates a persistent rise in inflation, its anti - inflation credibility remains 100 % intact ; later, the central bank simply announces that things are back to normal. that is utterly unrealistic. to re - iterate : the mpc ’ s forward guidance provides an articulated framework for a probing approach to policy, without a change in our preferences on inflation. 3 saying more about the committee ’ s approach to policy in this way might be particularly valuable during a period when signs of recovery have become more apparent. these are conditions in which it would be very easy for the financial markets, businesses and households to jump to the mistaken conclusion that monetary stimulus will soon begin to be withdrawn. given the slack in the economy, the committee is not in a rush. assuming anchored inflation expectations, an orthodox central bank would not contemplate beginning to withdraw stimulus until the economy had reached “ escape velocity ”, which i have defined to mean “ the economy growing, and being set to continue to grow, at a pace that gradually absorbs the slack in the labour market and within firms ”. 4 and at that point the central bank would assess the erosion of slack in the economy and thus the extent to which downward pressures on inflation were dissipating. since my own policy deliberations have been framed in terms of “ escape velocity ”, i saw real merit in any mpc forward guidance being cast in terms of a threshold for real growth. manifestly, this could not be a measure of slack in the economy ; it would be clear what it was and was not. once passed, it would prompt a rich assessment of slack and inflationary pressures, drawing on the widest possible range of indicators. the committee decided on a threshold specified in terms of unemployment. the mpc ’ s threshold is what it says : a threshold for assessing inflationary pressures, although the committee must maintain that broader assessment month - by - month, quarter - see woodford ( 2012 ), “ methods of policy accommodation at the interest - rate lower bound, ” presented at the jackson hole symposium. this is consistent with bean ( 2013 ), “ global aspects of unconventional monetary policy ”, the monetary policy committee ’ s forward guidance document ( op cit ) ; and with the governor ’ s remarks during the august inflation report press conference

been growing continuously for 15 years, a period characterised by solid growth, falling rates of unemployment, and low and stable inflation. and a similar pattern had held across other advanced economies. the question economists were asking themselves, including in the uk, was what explained that pattern. was it just good luck – had the economy been hit by 2004 2006 2008 2010 2012 2014 2016 2018 fewer or smaller unexpected shocks than in previous decades? or was it more down to good judgement – was the economy now, including because of source : google trends. google trends indices show the number of searches on a specific topic as a proportion of all searches, normalised to give a maximum value of 100. for instance in my recent speech “ resilience and innovation in post - trade ”, available online at https : / / www. bankofengland. co. uk / / media / boe / files / speech / 2019 / resilience - and - innovation - in - post - trade - speech - by - dave - ramsden. all speeches are available online at www. bankofengland. co. uk / news / speeches improvements in policy, better able to adjust to shocks when they did happen? one way analysts at the oecd and at the uk treasury tried to answer that question was by looking at graphs like these ( charts 2 and 3 ). 3 these try to quantify the resilience of different countries in specific time periods in terms of shocks to gdp. they show a statistical estimate of the average gdp shock to hit the g7 economies in the first and second half of the available pre - crisis data – roughly, the pre - crisis decade and the previous decade – and how long that average shock persisted for. the scale on the x axis shows the number of years from the point the shock first hit. and the scale on the y axis shows the deviation from trend output in each year. broadly speaking, the smaller the average shock, and the faster it goes back to trend, then, as defined, the more resilient the economy. there were a few conclusions that we drew from this analysis back in 2008. first, the scale of economic shocks, measured by the size of the initial impulse, had fallen significantly across all the g7 economies. and second, the shocks had generally become less persistent across economies. that ’ s less obviously true for the uk in this version of the chart, but it appeared true in the data that was available at the time.