round that buoy all too often before. and so we tightened policy, trying as best as we could through our tactics to minimise the unwanted upward pressure on the exchange rate. i know, chairman, only too well that this will be cold comfort to many of you in the exposed sectors - but there ’ s no point in pretending things are other than they are. the present imbalance means that we are trying to maintain stability in extraordinarily difficult circumstances. but i will make one final point. the inflation target we have been set is symmetrical. a significant, sustained, fall below 2½ % is to be regarded just as seriously as a significant, sustained, rise above it. and i give you my assurance that we will be just as rigorous in cutting interest rates if the overall evidence begins to point to our undershooting the target as we have been in raising them when the balance of risks was on the upside. there is now evidence that domestic demand growth is moderating, as it must do, and that the labour market is tightening more slowly than before. on top of that, as we said in our press notice last thursday - announcing that we had not changed interest rates - we recognise “ that deterioration in the international economy could increase the risks of inflation falling below the target ”. that is still not the most likely outcome in the eyes of most of us and given the real world uncertainties we can anyway never sensibly tie our hands. but there is no doubt in my mind that recent international developments have at least reduced the likelihood that we will need to tighten policy further.

would need neither to obstruct an improvement in the underlying performance of the economy, nor let the party get out of control. but that is what taking away the punchbowl is about. the same difficult judgments would face a combined monetary - and - macroprudential decision maker. and a separate monetary policymaker would have a shared interest in the downside risks to inflation not being exacerbated by the prospect of a credit bust following an unchecked boom. in those kind of circumstances, we should be helped by the tempo of the two endeavours differing. the fpc is less likely to make frequent course changes. that is reflected in its meeting routinely on a quarterly basis, contrasting with the mpc ’ s monthly meetings. so, as in the relationship between monetary policy and fiscal policy, the mpc will be able to take into account perturbations to aggregate demand from the fpcs interventions. both committees are part of the bank of england, so the executive of the bank will ensure that there is a common information base. fpc members are invited to the monthly briefing for mpc members. and vice versa, consistent with mpc members already being free to attend the internal financial stability briefings established over the past year or so. and finally, there will be a common chair, the governor, and overlapping membership. the members common to the two committees – four of us – will be in a minority on both to ensure that our perspective does not dominate either. how will the fpc operate and be accountable? although separate, the fpc will in many respects operate in much the same way as our monetary policy committee. there will be a schedule of regular policy meetings : four per year. a record of each will be published. and twice a year, the analysis underpinning our committee ’ s deliberations and decisions will be set out in the financial stability report. the role of the fsr will, therefore, become more like that of the bank ’ s inflation report in monetary policy. put crudely, warnings will carry greater weight under a regime where the bis central bankers ’ speeches fpc can actually take action. consistent with that, the fsr will in future be launched via a press conference. we expect, and hope, to be called regularly to give evidence to the treasury committee of the house of commons, and perhaps committees of the house of lords too. public hearings will help to keep financial stability issues in the public eye,