the referendum result. although i only joined the committee in september, the analytical approach in the framework is one that i fully sign up to. so i would like to spend a minute setting it out. fundamental to the way in which the mpc has reacted to brexit is that monetary policy cannot prevent either the necessary adjustment – such as that implied by the movement of the exchange rate - as the uk moves towards its new international trading arrangements, or the weaker income growth that is likely to accompany it. these are real phenomena likely to play out over many years – exactly the kind of thing that monetary policy cannot affect, no matter how often it is asked by some commentators to do so. what the mpc can do is support the economy during the adjustment process. but even in doing that the committee has faced a trade - off between stabilising inflation on the one hand and output and employment on the other. i would note this is something the committee was able to anticipate before the referendum, the minutes of the mpc ’ s may 2016 meeting stating that “ [ t ] he implications for the direction of monetary policy will depend on the relative magnitudes of the demand, supply and exchange rate effects. ” and my colleague ben broadbent has recently set out in more detail what this means in the particular context of brexit. true to this statement, the mpc has set monetary policy since the referendum on the basis of its assessment of how those effects are interacting. this is made difficult by the large, uncertain and sometimes offsetting implications of the decision to leave the eu. so it is not surprising that even though all committee members sign up to the framework i have laid out, their individual assessment of the economic outlook has differed along the way. decide which brings me to the second phase of ‘ end to end ’ monetary policy : decide. in the mpc ’ s meeting at the start of this month, a majority of its members thought that the evolution of supply and demand was such that the margin of slack in the economy now seemed fairly limited, and that underlying inflationary pressures had shown some signs of picking up. as a result, they judged that this reduced the degree to which it was appropriate for the mpc to tolerate an extended period of above - target inflation, and that a small reduction in stimulus was warranted. notwithstanding this 25bp increase, bank rate remains close to its lowest rate its 323 year history ( slide 2 ). all speeches are available online

understand these phenomena, improve the measurement of their development and impact in real time, and thus enhance our assessment of their implications for the risks to price stability. the uncertainty we face makes it advisable to use insights drawn from various modelling approaches, and to avoid any exclusive dependence on a single approach which may primarily rely on certain structural relationships, as these may be suffering from instability. in this context, it should be noted that globalisation and productivity developments affect the functioning of labour and product markets and the stability of the “ generalised phillips curve relationship ”. in other words, they affect the workings of the real economy which is at the centre of the economic analysis of the inflationary process. financial development and innovation, on the other hand, impinge on the functioning of the financial system and the stability of the demand for money and its counterparts – and therefore affect our analysis of the monetary factors determining price developments. the ecb ’ s monetary policy strategy which relies on both economic and monetary analysis allows us to use all available information in order to extract, in a comprehensive manner, signals concerning the risks to price stability that are as meaningful as possible. our analytical framework permits us to crosscheck the assessment derived from our economic analysis, which ( given the current state of models and statistical tools ) is more pertinent for short to medium - term horizons, with the assessment resulting from our monetary analysis, which can be especially relevant over the medium to longer term. this cross - checking, which may also lead to an averaging out of possibly “ noisy ” signals or persistent prediction errors that may be associated with a particular analytic approach, contributes to a more robust assessment of the evidence available and the risks to price stability. it is therefore conducive to robust decision - making in the presence of heightened uncertainty. our experience has shown that the ecb ’ s strategy has proven effective because it has employed all available information to reach a comprehensive assessment of the medium to long - term economic outlook and inflation risks. this has been essential for taking decisions on the appropriate monetary policy stance. however, the effectiveness of the ecb ’ s monetary policy also depends on other features of its strategy and its conduct. let me therefore now turn to two elements which characterise the ecb ’ s monetary policy : commitment and credibility. the ability of any central bank to maintain inflation expectations well anchored depends crucially on these two notions which concern the central bank ’ s intentions and the perception of these intentions by the markets and the public