targeting ‘ puzzle ’ by returning cpi inflation to 2 % at a specific point in time does not, of itself, represent a comprehensive or complete solution to the underlying problem of achieving price stability. it is not ‘ job done, we can now move on ’ to other issues. on the contrary, to paraphrase thomas jefferson : the price of achieving meaningful price stability is eternal vigilance. for one of the characteristics of a ‘ wicked problem ’ is that it does not a have a ‘ stopping rule ’. in other words, it is not possible to say that a ‘ wicked problem ’ has been definitively solved, once and for all. converting the ‘ wicked problem ’ into a ‘ puzzle ’ appears to make resolution more achievable and likely, but potentially at the risk of missing a key aspect of what makes the underlying problem so challenging. on the mpc, we are focused on returning cpi inflation to the 2 % target in line with our remit. given our mandate, that is what we should, have to and are doing. in parallel, we need to recognise that returning inflation to target is not the end of the story. we have to keep it there on a lasting and sustained basis. even if we return to more benign times in the coming years, the bank of england will still need to make investments in human, analytical, technological and institutional capital to ensure it has the capacity and capability to meet its price stability mandate. and on the basis of those investments, it will need to ensure that shocks that create either inflationary or disinflationary pressures in the future are met with policy responses that support price stability. many of you are studying economics ( or related disciplines ) here at warwick. at the bank, we are always seeking smart and dedicated recruits that want to contribute to our work. even after the mpc has brought cpi inflation back to 2 % – as i am sure it will – you can be sure that there will still be plenty of interesting and important work for you to do at the bank if we succeed in attracting you to threadneedle street. the views expressed in this speech are not necessarily those of the bank of england or the monetary policy committee. i would particularly like to thank saba alam, andrew bailey, harvey daniell, swati dhingra, jonathan haskell, catherine mann and martin seneca for helpful comments on earlier drafts of these remarks. the responsibility for all remaining errors is my own. endnotes 1. friedman

20th march last year. at first, the outflows were met by running down their holdings of cash, but as the outflows increased, they sought to liquidate some 2 / 6 bis central bankers'speeches of their bank assets – cds and cp. but they found that the market for those assets – which typically comes primarily from dealers buying back their own paper – was closed. the dash for cash meant that the tide was flowing fast against them. as the regulatory system currently works, if mmfs ’ liquid asset ratios fall towards prescribed thresholds, and they are unable to top up their liquid assets ( cash ) through sales, they are able to ‘ gate ’ or impose fees on investors, in other words decline to provide immediate liquidity. as with banks, the broader danger of this situation – which is a threat to financial stability – is that such a problem in one fund could trigger contagion to other funds, through fear that they might have the same problem, and thus lead to a highly destabilising run on money market funds. these thresholds can, therefore, also affect the behaviour of fund managers, making liquidity buffers not usable in times of stress, for fear this would fuel investors ’ desire to run. it is also important to note that another consequence of the rising demand for cash, and the failure to meet that demand by selling assets, was a sharp rise in money market rates. the rise was sharpest at longer money market - tenors, but there was also a pickup in overnight repo rates. this was a particularly serious sign of market dysfunction in what are core markets, and a serious challenge to our ability to implement monetary policy by keeping these rates broadly aligned to the official bank rate. it resulted in an increase in the cost and reduction in the availability of credit – to the financial system, other companies and households – precisely at the time they needed it most. there was therefore a serious threat to both monetary policy and financial stability, in other words both of the core purposes of a central bank. it was an existential moment. we took two actions which eased the pressure, and did so quickly. first, on 19th march the mpc decided to buy gilts in large size and at high speed. at its peak the pace of gilt purchases reached £13. 5bn per week, more than twice as fast as in early 2009. the use of this broad monetary policy tool was warranted given the widespread nature of the dash