1992 is around 50 bps per quarter. bis central bankers ’ speeches course, even after paying down debt following the crisis, uk households ’ indebtedness is high by historical and international measures so there may not be a great deal of room for growth in this area if we want to avoid vulnerabilities building up in the economy generally. the growth in credit since the crisis, however, has been in emerging markets rather than in advanced economies which brings me to the last risk – an unfortunate event from some form of a hard landing in major emerging markets. these are now a large part of the world economy and debt stocks in many emerging economies have grown sharply over the last eight years. this could amplify the stresses many of these economies already face from the inter - related effects of slower emerging market economy growth, much lower commodity prices and a stronger dollar. a more severe slowdown and debt - related financial stress in key emerging markets could well have an impact on advanced economies, including the uk, through a number of channels. one reassuring point is that the major uk banks and building societies were tested against precisely this scenario by the bank of england in 2015 and demonstrated they had the resilience to weather such a shock and carry on lending to the uk economy. conclusion looking back over the last two years, i think that the slow healing story can still explain where we are and provide a guide to our future prospects. but the story has to be adapted in the face of more uk and world weakness than i had expected and this weakness might be signalling that there are deeper structural factors at work. nonetheless, my central projection remains that the uk economy will continue to grow solidly and that inflation will return to target over the next few years. but, as always, policymakers need to be alive to the possible meaning of disappointments, to be very sensitive to the possibility of changing temperatures around them, and to the risk of unfortunate events. we have a range of tools at our disposal and should be ready to use them whichever risk materialises. bis central bankers ’ speeches

that a number of firms must have made substantial losses on the positions they had, there have not been many visible signs of severe financial distress. for most longer - term investors the stress has been seen as rather limited. credit spreads have not particularly blown out with rising “ risk - free ” rates. for example, yields on italian and spanish bonds were remarkably stable for most of this period ; advanced economy equity prices largely recovered ; and “ cov - lite ” loans have continued to be issued at a record pace. overall the system seems to have survived in reasonable shape and for many market participants the “ shock ” is seen as a healthy correction to what had become a complacent outlook. as reported in the record of the recent fpc meeting published yesterday, staff from the fca, pra and bank have carried out some analysis of the sensitivity of borrowers and financial institutions to upward movements in long - term interest rates and credit spreads. 3 that preliminary work suggested that “ a moderate rise in long - term interest rates did not pose an immediate threat to major banks and insurance companies. but borrowers would become more exposed to an increase in interest rates were debt levels to rise. and counterparty classes with higher leverage or exposures to market liquidity risk or credit spreads were more affected... ”. the committee did not draw too much comfort from this assessment and has asked that more detailed work be done to assess the risks. what have we learned from this episode? i will pick out a few of the highlights for discussion. first let me note that the “ stress ” so far has not involved any actual exit from accommodative policies in the advanced economies. the change in the outlook was initiated by speculation about the possibility that the fomc might start to slightly reduce the rate at which it is adding stimulus! it would have been a more severe stress if policy rates had actually been changed. many firms for whom maturity transformation is a major part of their business model will actually be better off if the short - term rates at which they fund themselves are relatively unchanged while longer - term rates rise. have markets got it wrong? if so then in my view that was not obviously in the price reactions since may ( although the extent of the fixed - income sell - off may turn out to have been overdone, especially for the uk ) – rather it was the expectations that had become embedded prior to may which had become overly certain even if, at that time, it