jul oct jan apr jul oct jan apr jul oct jan apr jul oct 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 notes : ( a ) cpi inflation excluding energy, food, alcoholic beverages and tobacco. source : ons. measures of core inflation have been below 2 % since the middle of 2014 ( chart 13 ), and weaker than projected in august. this mainly reflects weaker goods price inflation, which, in turn, is likely the product of sterling ’ s past appreciation ( chart 14 ). 21 those dynamics will continue to weigh on core inflation for a while, since around two - thirds of the effects of a currency move are estimated to appear in cpi inflation at horizons beyond one year, making them relevant for monetary policy strategy. 22 of course, the recent weakness in sterling, if it persists, will moderate these effects somewhat. note that one would not necessarily expect core inflation at 2 % with cpi inflation at target if the items excluded from core inflation measures undergo persistent relative price shifts. for example, a “ core ” measure that relied exclusively on inflation in the services sector would have run above 2 % in the pre - crisis era, when overall inflation was around 2 %, in light of low inflation rates in goods prices. a “ core ” measure with a higher weight on goods prices would have shown the opposite. for example, although they are uncertain, estimates of the pass - through of exchange rate movements to cpi inflation suggest that, on average a 1 % appreciation reduces consumer prices by around 0. 3 %. those effects take time, though they are mostly complete in around three years – consistent with complete but gradual passthrough of exchange rate changes to consumer prices. that likely reflects, among other things, rigidities in retailers ’ pricing decisions. see the box on page 28 of the november 2015 inflation report for further discussion. bis central bankers ’ speeches chart 14 : sterling appreciated significantly since march 2013 before moderating recently sterling trade - weighted usd per £ euros per £ index ( march 2013 = 100 ) jan 16 dec 15 oct 15 nov 15 sep 15 jul 15 aug 15 jun 15 apr 15 may 15 mar 15 jan 15 feb 15 dec 14 oct 14 nov 14 sep 14 jul 14 aug 14 jun 14 apr 14 may 14 mar 14 jan 14 feb 14 dec 13 nov 13 oct 13 sep 13 jul 13 aug 13 jun 13 apr 13 may 13 mar 13 source : bank calculations. conclusion the three factors i have described

, and that news is inherently difficult to forecast. each month the committee makes a careful assessment of the outlook for inflation, and it is that which will guide our decisions on the appropriate level of interest rates. it is over 3 1 / 2 years since interest rates were last raised - the longest such period since bank rate was held constant at 2 % through the 1940s. at some point reducing the present degree of monetary stimulus will be necessary in order to keep inflation on track to meet the target. the timing of any such decision will reflect our judgment of the outlook for inflation. listening to our business contacts and learning from our visits around the uk is an important input into that judgment. to retain the unrivalled degree of stability that we achieved during the “ nice ” decade will be an even more difficult challenge for the future. the present monetary and fiscal frameworks provide a seaworthy policy vessel, but, as all sailors know, fog, especially statistical fog, can be dangerous. so we must hope that lady luck will continue to smile on us.