the toes of monetary policy [ 25 ]. and while there may have been a difference in direction of policy – buying versus selling gilts – the goals were complementary. the aim of our intervention was to prevent financial stability from being threatened by severe dislocations in gilt markets. with the gilt market dysfunctional, monetary policy would have had unpredictable effects and would likely not have fed through to the economy as expected. so stabilising the market also supported the conditions for monetary policy to be carried out as normal. looking ahead surviving this crisis doesn ’ t mean the fpc can relax. tightening monetary policy after a long period of very low rates has the potential to reveal further financial vulnerabilities. we need to consider how declining asset and collateral values flow through the system, including potential risks that may arise as leverage is unwound. but having built up resilience in the system ahead of time should prove a smart investment. reforms since the gfc mean that the core of the financial system, especially banks, is much safer. and so far banks and insurers have shown themselves to be resilient, notwithstanding the sharp increase in interest rates. the same can be said of households and businesses. rising rates will affect house prices, but the fpc has helped to limit risks from household debt through our mortgage market tools. and by stress testing banks against major increases in corporate defaults we have reduced the risk of the banking system amplifying distress in the corporate sector. in fact we have been including ‘ rates up ’ scenarios in our stress tests for many years, giving us a forward - looking view of the system ’ s resilience to increases in interest rates and so the ability to build extra resilience in advance of higher rates materialising. all of this means that while the fpc stays on the case for financial stability, the mpc can get on with its job of ensuring monetary stability. of course the ldi episode highlights the need for vigilance. this is particularly true for marketbased finance – financial institutions outside the banking system. market - based finance has grown rapidly and not been subject to the same regulatory scrutiny as banks. and as monetary policy makers gradually implement qt, financial markets will adjust, perhaps in unexpected ways [ 26 ]. this is a key motivation for our upcoming non - bank exploratory stress scenario, and an ongoing area of focus for us and international counterparts. how we work – and the need for

still more that research can do to help us deal with these interactions better. that ’ s where you can help. interactions in practice after the global financial crisis now i ’ d like to talk about how the theory i outlined has played out in practice. i ’ ll focus on the period following the gfc, and the events of last autumn. the gfc in 2007 - 2009 presented a huge challenge for monetary policy and financial stability. although it had its origins in the financial system – a combination of excessive leverage, reckless lending, lax regulation and financial engineering – monetary policy was the first responder. as the financial system froze up and demand contracted, central banks around the world had to respond. they did so by slashing interest rates and later launching massive bond buying programmes ( qe ). along with large - scale government support to the banking system, these actions helped to shore up the global economy, avoiding a rerun of the great depression. and while central bank actions were taken for monetary policy reasons, they supported financial stability. initially expected to be temporary, low interest rates stayed with us. between march 2009 and december 2021 bank rate averaged less than 0. 5 %, a tenth of the 1998 - 2008 average, and the 10 year government bond yield fell from 3. 7 % in 2011 to 0. 1 % in july 2020. low interest rates did not just happen in the uk – interest rates across much of the developed world were very low over this period. and while policy rates moved sharply in response to the gfc, long - term trends – a fall in what is known as ‘ equilibrium interest rates ’ driven by structural factors such as ageing populations and low productivity growth [ 19 ] – helped to keep rates low for a long period. while low short - term interest rates were necessary to support the economy and meet monetary objectives, they also created conditions that could affect financial stability. this is where the fpc comes in. having learned lessons from the gfc, we knew that price stability wasn ’ t a sufficient condition for financial stability. so the fpc was there to scan for financial stability risks and take preventative action to contain them where necessary. and that is what we did. take the housing and mortgage market, for example. historically, the uk housing market has been characterised by periodic boom episodes, followed by busts with serious consequences for financial stability and economic growth. the period of low interest rates following the gfc threatened to create the conditions for another boom in house