conditioning assumptions, not just forward interest rates, and any of these can change. our understanding of the economy evolves over time and the economy itself is always subject to unforeseeable shocks. empirically, the behaviour of the economy matters more for interest rates than prior forecasts. in addition, the mpc isn ’ t solely concerned with inflation anyway, still less its most likely rate at a fixed point in the future. that means that the target horizon for inflation is generally longer than the earliest point at which policy can affect it – there is therefore no single, unique path of interest rates that will do the job. it also means that the horizon itself can vary. i will therefore conclude with something of an apology. for those in the audience wanting me to give a direct and unequivocal promise as to when bank rate will change, you will, i ’ m afraid, be disappointed. i can ’ t. but you should look on the bright side. if there is any value in listening to people like me, it is to help you with what is the best way to try and predict future interest rates - to forecast the economy yourselves ( which is probably more interesting ). after all, if the future were perfectly predictable we wouldn ’ t have to bother trying. references broadbent ben, 2014, “ unemployment and the conduct of monetary policy in the uk ”, speech given at the federal reserve bank of kansas city 38th economic symposium, jackson hole, wyoming. campbell john, 1995, “ some lessons from the yield curve ”, journal of economic perspective, vol. 9, no. 3. eguren - martin f. and n. mclaren, 2015, “ how much do uk market interest rates respond to macroeconomic data news? ”, bank of england quarterly bulletin. gabaix xavier 2012, “ variable rare disasters : an exactly solved framework for ten puzzles in macro - finance ”, quarterly journal of economics, volume 127, issue 2, pp. 645 – 700. joyce m. and a. meldrum, 2008, “ market expectations of future bank rate ”, bank of england quarterly bulletin. macaulay frederick, 1938, “ some theoretical problems suggested by the movements of interest rates, bond yields, and stock prices in the united states since 1856 ”, national bureau of economic research, pp. 33. mankiw g., and l. summers, 1984, “ do long - term interest rates overreact to short - term interest

counterparty default. given that since the global financial crisis the balance of direct risk - taking in specific products has shifted away from investment banks to their clients, counterparty risk is greater than ever before. today, the bigger risk to investment banks is not from their proprietary positions, but from the aggregate exposures of their clients. clearly losses from counterparty risk are not new. during the global financial crisis losses from counterparty defaults totalled over $ 50bn. but these losses were overshadowed by banks ’ own losses of nearly $ 200bn from principal positions. the global financial crisis however taught us that it was concentrations that present a great danger in firms ’ counterparty risks. 70 % of counterparty losses in the crisis came from similar uncollateralised cds exposures to a small number of monoline insurers. these risk concentrations were not well managed or controlled. unfortunately we have again seen banks ’ counterparty risk concentrations not appropriately identified or controlled. it is disappointing that lessons from the crisis on counterparty risk management were not properly learned. as we set out in our dear ceo letter last year, archegos is a prime example of this – a single client of many firms had built up risk concentrations that proved to be outsized. some banks also got caught by this in the nickel market more recently. in other cases, we have seen groups of clients with similar risk exposures, whether that be large concentrated positions of their own or trades with banks that held such positions, which proved difficult to exit as market conditions and liquidity dynamics changed. risk concentration should not only be assessed on a client by client basis, but across all clients combined. and most importantly, across the client ’ s market - wide portfolio, not just the portion held with a single firm itself. whilst this information may not be readily available, the onus is on firms to demand of their clients the information they need to assess the risks they are exposed to. we also see some firms not adequately assessing the liquidity position of their counterparties. look at the “ dash for cash ” in march 2020 or recent issues in the commodities markets. whilst counterparties may be fully hedged against capital losses from sharp moves in asset prices, some have found difficulty in monetising their assets in order to meet margin calls. firms ’ management and boards should ensure that in credit assessments equal focus is placed on the liquidity profile of their clients as on their capital strength. right - way risk is only right - way