. 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

mixed. [ 13 ] on occasion, it has started well. but – almost uniformly – it has eventually ended in confusion. at a time when policy rates were stuck at their absorbing effective lower bond, a case for forward guidance could be made on the grounds that it allowed for further monetary easing by flattening the forward rate curve when the conventional approach of lowering bank rate was no longer available. [ 14 ] but – at least for the present – that case no longer holds, now that rates have risen comfortably into positive territory. if some easing were required, bank rate could be raised more slowly than currently anticipated ( or even reduced if necessary ). forward guidance can also help contain interest rate volatility while policy is uncertain. as central banks make the difficult transition away from the very accommodative policy settings first established in the face of the global financial crisis and maintained, more or less, ever since, a case could be made that forward guidance ( capital f, capital g ) has helped to ease and support the shift. it is on that basis that i have – somewhat reluctantly – acquiesced in the ‘ further tightening ’ forward guidance embodied in mpc statements through the turn of the year. but now asset purchases have ceased, bank rate has risen, the qe asset portfolio is shrinking, and gilt sales are under consideration. the transition from one phase of monetary policy to another is better established, and better understood. as a result, the case for maintaining forward guidance to smooth the transition is, at least in my view, much diminished. on this basis, the ‘ further tightening ’ forward guidance that had been in place in mpc statements since november – despite its evolution over the intervening period – had come to outlive its usefulness. speaking from the collective perspective of the mpc, using forward guidance of that form requires near - unanimity across members of the committee if it is to be meaningful. but, as the patterns of individual votes on bank rate in recent months reveals, unanimity about the short - term interest rate outlook no longer exists. we should not be defensive about that. one of the strengths of the mpc set - up is individual accountability and the diversity of view that it encourages. at a time when inflation is elevated, monetary policy faces substantial challenges, and uncertainty is heightened by geopolitical and epidemiological concerns, it would be not only surprising but also worrying if all mpc members moved in lockstep