published in just under four weeks time. in the intervening period we will be seeking answers to a range of questions to inform our assessment of how quickly inflation will return to target in the medium term. for me questions include : is there any evidence that the tight labour market is easing ; what is the revised outlook for demand in view of the government ’ s fiscal announcements ; are domestically generated inflation pressures consistent with returning inflation to the 2 per cent target ; and what do financial market developments tell us. the mpc was clear in its language in september that should the outlook suggest more persistent inflationary pressures, including from stronger demand, the committee would respond forcefully as necessary. in the context of the developments i ’ ve set out for you, today i think the central question for all nine of us on the mpc is how forceful do we need to be, to ensure inflation does return sustainably to the 2 % target in the medium term. these are very challenging times for the uk economy and millions of households and businesses are experiencing real hardship as a result of the cost of living crisis. on the mpc we are acutely conscious that for many our monetary policy actions are adding to the difficulties caused by the current situation. we know from past periods in our history the damage to households and businesses that would result if high inflation persisted. unlike earlier inflationary episodes, where we saw more persistence in inflation caused by ineffective policy and policy frameworks, this time we have a monetary policy framework which empowers us to take action. however difficult the consequences might be for the economy, the mpc must stay the course and set monetary policy to return inflation to achieve the 2 % target sustainably in the medium term, consistent with the remit given to us. with thanks to rupal patel for her assistance in preparing these remarks, and to my fellow mpc members and numerous bank colleagues, including callum ashworth, fabrizio cadamagnani, alan castle, grace greer, thomas jennings, josh martin, maggie illingworth, harry rigg, andrea rosen, may rostom, martin seneca, bradley speigner, boromeus wanengkirtyo for their many helpful contributions. 1. there is a huge literature on techniques for and applications of the identification of shocks. different categorisations have been used for a variety of policy purposes. for example whether shocks are common or idiosyncratic was a key consideration for hm treasury ’ s 2003 five tests assessment of whether

compensation ( 5y2y forward swap ) sources : barclays live and bank calculations. the monetary policy response let me conclude by setting out how in response to these developments the mpc is setting monetary policy to ensure that cpi inflation will return to the 2 % target in the medium term. monetary policy is also acting to ensure that longer - term inflation expectations are anchored at the 2 % target. the mpc started to tighten monetary policy in december 2021, raising bank rate from 0. 1 % to 0. 25 %. so much has happened since but it is worth recalling that last december was less than three months after the end of the furlough scheme here in the uk and was when the rapid emergence of the omicron variant was a major concern. it was also three months before the fed started to tighten policy in the us and almost seven months before the ecb began the tightening cycle in the euro area. bank rate has been increased at every mpc meeting since december 2021 and was increased by 0. 5 % at both the august and september meetings, to its current level of 2. 25 % [ 9 ]. along with two of my mpc colleagues i voted for a larger 0. 75 % increase in bank rate, to 2. 5 % at the september 2022 meeting. at the time the three of us highlighted that the recent data outturns had already registered more persistent inflationary pressures and that mediumterm measures of inflation expectations remained high. we welcomed the reduction of the near - term peak in inflation which will result from the energy price guarantee but noted that the additional support it is providing to households will add to demand pressure. my september vote was informed by three particular aspects of what i ’ ve set out for you today. first the greater certainty we have about household spending, because of the greater support to demand being provided by the energy price guarantee. second the trends i ’ ve observed in domestically generated inflation, including in labour costs, in firms ’ pricing and in the broadening out in inflationary pressures with services price inflation now contributing more to overall cpi inflation. and third, higher medium - term inflation expectations and the risk that a more inflationary mentality takes hold throughout the economy. in my view a faster policy tightening at the last mpc meeting would have helped to bring inflation back to the 2 % target sustainably in the medium term and would reduce the risks of a more extended and costly tightening later. our november decision and latest forecasts will be