matters is the next one. when eddie george and i sat in the governor ’ s office on that sunny bank holiday morning in 1997, we knew we had been given an opportunity to change monetary policy for the better. we had to grab it with both hands. that is exactly what the bank has done. references blinder, a s ( 2004 ), the quiet revolution : central banking goes modern, yale university press. blinder, a s and morgan, r ( 2000 ), “ are two heads better than one? an experimental analysis of group vs individual decision making ”, nber working paper no 7909, september. goldman sachs economic research ( 2006 ), “ should the mpc have pre - announced the hike? ”, uk economics analyst, 6, 9. goodhart, c a e ( 2007 ), “ whatever became of the monetary aggregates? ”, peston lecture at queen mary college, london. hennessy, p ( 2007 ), having it so good : britain in the fifties, penguin. king, m a ( 2002a ), “ the monetary policy committee five years on ”, speech to the society of business economists, bank of england quarterly bulletin, summer 2002. king, m a ( 2002b ), “ no money, no inflation : the role of money in the economy ”, bank of england quarterly bulletin, summer 2002. king, m a ( 2004 ), “ speech at the eden project, cornwall ”, http : / / www. bankofengland. co. uk / publications / speeches / 2004 / speech229. pdf. available at : king, m a ( 2005 ), “ monetary policy : practice ahead of theory ”, mais lecture at the cass business school, london, bank of england quarterly bulletin, summer 2005. lombardelli, c, proudman, a j and talbot, j ( 2005 ), “ committees versus individuals : an experimental analysis of monetary policy decision making ”, international journal of central banking, 1, 5. svensson, l e o ( 2003 ), “ the inflation forecast and the loss function ”, in mizen ( ed. ), central banking, monetary theory and practice : essays in honour of charles goodhart, london : edward elgar. taylor, j b ( 1979 ), “ estimation and control of a macroeconomic model with rational expectations ”, econometrica, 47, 5.

late 1990s as the result of a supply ( productivity ) shock rather than an increase in demand. the challenge is to carry this level of interrogation and questioning of the data to our analysis of money and credit. we are trying to develop models that help us to distinguish between demand and supply shocks to money and we shall be devoting more resources to this task, including our new credit conditions survey. ( b ) what we say : central bank communications in recent years, a great deal has been written about how and why central banks communicate with financial markets and the public more generally. communications are crucial to a central bank ’ s ability to anchor inflation expectations. only two questions really matter. what are central banks trying to communicate and to whom? the first task for a central bank is to communicate the case for price stability in a simple and straightforward way to as wide an audience as possible. with our range of publications, films, the competition for schools target 2. 0, and our programme of regular regional visits, the bank of england invests a good deal of resources in achieving this objective. we also monitor progress using opinion polls and report regularly their findings. building a large constituency for price stability is an essential part of convincing people that low and stable inflation will be at the heart of macroeconomic policy for the indefinite future. for the mpc, there is the specific task of explaining that by price stability we mean our target of 2 % inflation as measured by the cpi. the second task relates to communication about the reasons for monetary policy decisions to financial markets, households and businesses. no communications strategy can ignore the fact that the monetary policy committee was set up precisely because there is no timeless “ reaction function ” to be communicated to the public. it is as important to explain what we don ’ t know as what we do know. we are trying to get across the fruits of our learning about the economy, not a static view of the world. our aim is to help people understand the thinking behind the committee ’ s decisions, the various hypotheses that the committee entertains about the current conjuncture and the data that we shall be examining in order to discriminate among them. that should help people work out how we are likely to react to future data as they come in. and it is why we place importance on the minutes of our monthly meetings and the quarterly inflation report to convey a full explanation of our thinking. explaining our analysis at some length is a richer source of information for markets than code