mpc ’ s target. monetary policy was responding as required, by tightening to bring inflation sustainably back to target in the medium term. the mpc increased interest rates, and announced its intention to start selling uk government bonds – known as gilts – as part of this more general tightening of monetary policy. subsequently, and following the government ’ s fiscal announcements on 23 september, we found ourselves facing an acute stress in the gilt market, which had started in a small corner of the pension world [ 20 ]. as gilt yields spiked, some liability - driven investment ( ldi ) funds found themselves over - leveraged and needing to reduce their borrowing. with insufficient time to raise new capital from their pension fund investors, they faced having to sell gilts into a falling market, further depressing prices and increasing the amount they needed to sell [ 21 ]. to stop this self - reinforcing spiral of asset sales the bank intervened, buying gilts on financial stability grounds. this targeted action over 13 days stabilised the gilt market and in so doing allowed ldi funds to reduce their leverage to sustainable levels. but unlike in the gfc or 2020 ‘ dash for cash ’, the actions needed for monetary policy and financial stability seemed to point in opposite directions. the mpc had announced its intention to start selling gilts, but to support market functioning and financial stability the bank needed to buy gilts. this was one of the more limited examples of times when monetary and macroprudential policy weren ’ t pushing in the same direction. it looked, on the face of it, like there could be tension between the two [ 22 ]. i would argue our institutional arrangements handled this well. first the bank, following a recommendation from the fpc, made the decision to intervene in markets explicitly on financial stability grounds. that made accountability and purpose clear. second, we designed the intervention to be targeted – buying long - dated and later index - linked gilts that ldi funds needed to sell to reduce their leverage. third, it was explicitly temporary, running for only 13 days. in november, just a few weeks after our financial stability operations ended, quantitative tightening ( qt ) sales had begun [ 23 ]. and by 12 january – just three months after the end of our operation – the gilts we purchased had been sold back into the market [ 24 ]. with this temporary and targeted intervention we were able to do what was needed for financial stability without treading on

, the lowest for a generation, and never deviated more than one percentage point from that average. unemployment fell from almost 10 % to around 3 % on the claimant count, its lowest level for almost three decades, and has now been virtually unchanged for twenty months, by far its longest period of stability. the terms of trade moved in britain ’ s favour, raising our national standard of living. and output has risen in every single quarter since the middle of 1992, something that is true of no other g7 economy. why were the 1990s so successful? and can that success continue? four features of our economy lie behind this improved performance. first, the new monetary framework - based on an explicit target for inflation, a high degree of transparency, and, since 1997, independence of the bank of england made it clear to everyone that monetary policy was, and would continue to be, targeted on maintaining low and stable inflation. second, a substantial fiscal consolidation turned a deficit of 8 % of gdp in 1993 into a sustainable position for the public finances based on a set of clear rules for government debt. third, a continuing programme of supply - side reforms, over a period of 20 years, made it possible to reduce unemployment without generating higher inflation. fourth, although the unexpected twists and turns of the world economy did pose real challenges to monetary policy, especially in the latter half of the decade, those shocks tended to average out over time rather than cumulate in either an upward or downward spiral. in other words, the economic surprises alternated between good one year and bad the next, rather than adding up to “ one damn thing after another ”. in that sense, lady luck smiled on us. of course, we were not alone in enjoying the 1990s. in the united states growth was so rapid that at least two authors wrote books entitled “ the roaring nineties ” and another chose the title “ the fabulous decade ”. in contrast, continental europe experienced slow growth and heart - searching over structural reforms. as with much else, our economic performance lay somewhere between the excited exuberance of the united states and the relative disappointment of continental europe. so the uk experienced a non - inflationary consistently expansionary - or “ nice ” - decade ; a decade in which growth was a little above trend, unemployment fell steadily, and, supported by the improved terms of trade, real take - home pay rose without adding to employers ’ costs, thus allowing consumption to grow at above trend rates without putting upward pressure on