recent developments in the economy and markets − speech by huw pill given at institute of directors ni annual dinner, holywood, county down published on 29 september 2022 speech good evening everyone. it is a great pleasure to speak at tonight ’ s annual dinner of the institute of directors in northern ireland. i owe thanks to gordon milligan and his iod colleagues for their kind invitation. i would also like to thank my colleagues frances hill and gillian anderson from the bank of england ’ s belfast agency for putting together such a great agenda for my northern ireland visit. many of you will know them as contacts of the agency, feeding information about business developments and your own firms ’ situation into the bank ’ s decision making processes. let me take this opportunity to thank you for all the time and effort you take to provide those insights. my colleagues on the mpc – as well as in other parts of the bank – find this information invaluable in getting a timely read on the economy. at a time when we are faced with uncertainty on many dimensions, that timely read can strongly influence our thinking, our analysis and, ultimately, our policy decisions. the bank ’ s belfast agency was set up in the late 1990s to ensure that developments in northern ireland were fully embodied in the bank ’ s economic assessment. as a welshman now working in threadneedle street, i appreciate that the bank of england can appear a remote institution, apparently focused on the city of london and far away from the day - to - day concerns of people living elsewhere in the uk. the work of the agencies provides a bridge between the bank and the households, businesses and communities it serves. through my discussions over the past couple of days, i have learnt about how brexit has affected trading relationships on the island of ireland and across the irish sea. and our citizens panel on the cost - of - living emphasised the distinctiveness of the retail energy market in northern ireland, which has been in focus of late given the sharp rises in utility bills. i am not going to discuss those issues this evening – although i realise that they are important, as well as politically and economically sensitive. i have been in listening mode, and can now take some of the lessons learnt back to our deliberations at the bank. i originally hoped to spend the bulk of my time exploring the macroeconomic motivations underlying mpc decisions in the past few months. i hope to return to those issues in a moment. but given recent events

of collateral calls, forced sales and disappearing liquidity from emerging in a core segment of the financial markets. restoring market functioning helps reduce any risks from contagion to credit conditions for uk households and businesses. the intervention is targeted specifically at that market segment where problems were emerging. and it is time - limited, because the bank buys assets in order to sell them on afterwards, thereby helping the orderly re - shuffling of holdings of and exposures to longer - dated gilts that needs to take place. these operations do not create central bank money on a lasting basis. as a result they will not shift the underlying macroeconomically - relevant monetary trends in the economy, which ultimately pin down developments in the price level. they are not intended to cap or control longer - term interest rates or to offer more favourable underlying financing conditions to the institutions involved – or, for that matter, to the government – than would have prevailed in an orderly market environment. in the spirit of the famous bagehot rule addressing the threat of bank deposit runs, yesterday ’ s intervention is intended to prevent painful, adverse self - fulfilling market dynamics emerging. that is why yesterday ’ s intervention is a “ temporary and targeted financial stability operation ”. it is intended to allow the inevitable and necessary re - pricing of financial assets stemming from recent macroeconomic news – including last week ’ s fiscal announcements – to take place in an orderly way. so yesterday ’ s intervention was not a monetary policy operation. the temporary and targeted character of the bank ’ s intervention is key to the distinction between financial stability and monetary policy that i have emphasised here. with that in mind, let me now turn to the responsibilities of the monetary policy committee ( mpc ), of which i am a member. the mpc will make a comprehensive assessment of the macroeconomic and monetary situation ahead of our next meeting in early november, before coming to a decision on the monetary policy stance. hopefully, what i am about to say is self - evident. but in current circumstances it bears saying nevertheless. on the mpc, we are certainly not indifferent to the re - pricing of financial assets we have seen over the past few days. indeed, we cannot be indifferent. for a small, open market economy like the uk, changes in asset prices have an important impact on macro developments though a variety of channels : via the cost of financing ; via the cost of imports ; and via their impact on both aggregate demand and aggregate supply. we need to factor the impact