. as reported in the official statistics, the uk terms of trade have not deteriorated that much over the past year, although the trade statistics ( both for prices and volumes ) have been affected by methodological changes ( and the underlying challenges posed by covid and brexit for data collection ). nonetheless, higher international energy prices weigh on domestic demand through their implications for household real income and the real profits of non - energy companies. 11. see ‘ wages and inflation ’ in the bank of england monetary policy report, february 2022. 12. see pill ( 2021 ). 13. see broadbent ( 2022 ) for a discussion of the issues surrounding central bank forward guidance in a uk context. 14. see filardo ( 2014 ), rudebusch and williams ( 2008 ). 15. or ( as in the mpc ’ s may 2022 monetary policy summary ) entertain dissenting views not just on votes on bank rate but also on the communication reflected in the summary. 16. for a discussion of these risks and their potential consequences in a previous interest rate cycle, see pill ( 2019 ). 17. see bank rate increased to 1. 25 %, bank of england, 16 june 2022. 18. 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 and nick bate for their help in preparing the speech. i have also received helpful comments from andrew bailey, tom belsham, ben broadbent, fabrizio cadamagnani, alan castle, andrew hauser, neil kisserli, catherine l mann, nick mclaren, dave ramsden, michael saunders, fergal shortall and silvana tenreyro, for which i am most grateful. the responsibility for all remaining errors is my own. returning inflation to target - slides

francois villeroy de galhau : monitoring financial stability, with active monetary policies speech by mr francois villeroy de galhau, governor of the bank of france, at a conference at the london business school, london, 23 november 2017. * * * accompanying slides ladies and gentlemen, price stability and the prevention of financial imbalances are often two sides of the same coin. indeed, price stability and financial stability are supposed to be complementary and mutually beneficial. during the recent crisis in the euro area, the transmission mechanism of monetary policy was hampered by a fragmented interbank market, as borrowing conditions deteriorated in stressed countries. the resulting deterioration in the economy in turn contributed to a further worsening of the financial stress, in what we call a real - financial feedback loop. to cope with this difficult situation, the policy response in the euro area was twofold. first, we adopted an active monetary policy and launched unconventional measures that included the credit easing package. second, we set up a banking union and assigned new macroprudential powers and tasks both at the european level ( the ecb, the esrb ) as well as at the national level. in france, the haut conseil de stabilite financiere ( hcsf or high council for financial stability ) was created in july 2013 as the french authority with the legal ability to impose binding macroprudential measures. the economy is now recovering, so the medicine seems to have worked. however, our attention is now turning to the potential side effects of our treatment. monetary policy in the euro area is maintaining short - term nominal interest rates at very low levels, and through our forward guidance, rates are also very low up to medium - term maturities. but, as the economy is recovering and we are progressing towards our inflation target, the governing council clearly decided on 26 october to pursue the gradual normalisation of our monetary policy. we will continue along this road, but financial stability concerns could be increasing. it has recently been argued that this could result in unwanted side effects in terms of asset price misalignments or spur a search for yield that would entail excessive risk taking. the issue of the side - effects of monetary policy is not entirely new. monetary policy is never neutral since it works its way through to the real economy via its effects on financial conditions, that is to say the current and expected cost of borrowing liquidity, and in turn on asset prices and risk premia, even in normal