this recovery has not been uniform across different sectors of the economy, with manufacturing growing faster than services. there has also been some variability in growth rates from quarter to quarter, with relatively weak growth through last autumn and winter, but much stronger growth over the spring and summer of this year. gdp has risen by 2. 8 % over the last year, a faster pace than the 2 % or so seen in the first year of the previous two recoveries. 2 a recovery has also started at an earlier stage in the cycle than in the early 1990s, when the economy “ bumped along the bottom ” for a number of quarters before growth became firmly established. it is particularly encouraging that manufacturing output has been growing particularly strongly, up by 5. 3 % on a year ago in the third quarter. this is the strongest year - on - year manufacturing growth we have seen since the end of 1994, sixteen years ago. the latest business surveys are generally positive about the continuation of the growth of manufacturing output. and the cbi ’ s latest quarterly industrial trends survey, released last month, shows the strongest investment intentions in manufacturing since 1997 and the most significant employment growth since 1989. these are all encouraging signs for the rebalancing of the uk economy – towards manufacturing and away from services – which most economic analysts have suggested is likely to be needed over the course of this recovery. these rates of growth – across the uk economy as a whole and in manufacturing – would not be possible unless the demand climate had changed very significantly over the course of the last 12 – 18 months. the global economy has bounced back strongly, with the imf now projecting world growth of 4. 8 % this year and 4. 2 % next year. asia and a number of other emerging market economies are providing a powerful engine of growth to the world economy at present. though the news is more mixed from the us and europe, their economies are still on a recovery track. indeed, the current gloomy mood about the us economy does not seem to be borne out by the most recent economic data – with the value of retail sales up by 7. 3 % on a year ago in october and manufacturing output up by 6. 1 % over the same period. within europe, a strong performance from the “ core ” european economies is outweighing the drag from the fiscal and banking problems of some countries on the periphery. the german economy has been particularly resilient, with gdp up nearly 4 % on a year ago in the third

the monetary stimulus from quantitative easing, there is still likely to be a considerable support for growth from monetary policy even if interest rates are raised somewhat from their current level. indeed, it is most unusual for the uk to experience a period as long as eighteen months or more with no change in the official interest rate, as we have done since march 2009. the period over which bank rate has been held constant at 0. 5 % is now the longest period without a change in the official interest rate since 1951 ( prior to which the bank ’ s official interest rate had been held at 2 % since the 1930s ). i do not believe that the current economic conditions justify a continuation of this policy. the longer we keep interest rates at an exceptionally low level, the greater is the risk that bank rate would need to rise sharply in the future – creating a serious setback to business and consumer confidence. we should seek to avoid such a sudden lurch in policy. a gradual transition to higher interest rates appears much more likely to provide a stable and predictable approach to policy - making which enables the business community to plan sensibly for the future. as the private sector of the economy “ gets back to business ” and we get accustomed to a resumption in growth following the financial crisis, so monetary policy also needs to “ get back to business ”. it is quite right for the mpc to support the economy in recession when there are significant deflationary risks. but, as the economy recovers, a key task for the mpc is to maintain monetary discipline and confidence in a world of low and stable inflation. as the governor wrote in his letter to the chancellor last week, echoing the mpc remit : “ price stability is a precondition for high and stable levels of growth and employment ”. confidence for example, the average forecast for 1994 real gdp growth made by the treasury “ panel of wise men ” in october 1993 was 2. 7 %, over 1. 5 % below the out - turn of 4. 3 %. in a world of stable prices in the uk has been hard - won in recent years and we need to safeguard it carefully. i worry that monetary discipline and confidence in the inflation target risks being eroded by keeping emergency settings for monetary policy in place for too long, when the growth and inflation outlook points in a different direction. that is why i have argued for a gradual withdrawal of monetary stimulus and why i will continue to do so, in the absence of material