of the economy, there is little evidence as yet in the overall productivity data that would suggest an imminent, abnormal, pick - up in the underlying rate of capacity output growth such as they have seen in the us, however fervently we might hope to become infected by what is happening there! now none of this means that we have closed our minds to the possibility of a more benign relationship between the demand and supply sides of the economy, which would allow us to sustain for a time stronger growth consistently with meeting our inflation target. but we can ’ t afford to bet the bank on that happy state of affairs either. when people approach me with the sound - bite “ give growth a chance ” what i hear them saying is “ take a risk with inflation ”. but equally when they say “ you must take no risks with inflation ” i hear them saying “ the world will never change ”. the truth is that nobody knows with any great confidence. the important thing is to keep an open mind and to monitor intensively all of the data as it becomes available to us, and draw what inferences we can as to how those data affect the balance of risks around the inflation target looking ahead. what is encouraging, mr chairman, is that for all these uncertainties and complications the broad prospect for the uk economy - including the scottish economy - over the next couple of years is for continuing relatively strong growth, with continuing relatively high employment, and continuing relatively low inflation. the monetary policy debate is a narrow one, it is about just how strong the growth, just how high the employment and just how low the rate of inflation. it ’ s a very long time since any of us could describe the debate in that way with any degree of confidence.

- balance the economy away from domestic spending towards net exports and so reduce the uk ’ s current account deficit. a real depreciation, boosting the competitive position of uk producers in both domestic and overseas markets, is part of the mechanism to bring such a rebalancing about. and an increase in net exports will, of course, help to fill the hole made by the crisis - induced reduction in private and, potentially, public spending. unfortunately, there is little sign so far of a significant impact of the depreciation on the volumes of exports and imports, which have moved broadly in line with the movements in overall demand abroad and at home respectively ( see charts 4 and 5 ). moreover, commentators have noted that exporters have responded to the depreciation by expanding their profit margins rather than cutting their foreign currency prices in order to boost market share. does this mean that the depreciation will prove ineffective at boosting demand? i do not think that would be the right conclusion. experience after previous large depreciations, such as following sterling ’ s exit from the exchange rate mechanism in 1992, suggests that it is normal for the initial impact to be seen mainly in expanded profit margins and only after some while does one see an impact on market shares. one reason for that may be that expansion in overseas markets requires some investment and businesses are likely to be cautious about making that expenditure until they are sure the improvement in profitability will be maintained. for that reason, i expect to see the contribution from net exports gradually building as the global recovery proceeds. the path of the recovery will be determined by the balance between these two sets of forces. our central expectation, as laid out in our february inflation report, is for four - quarter gdp growth to gradually strengthen as the year proceeds ( chart 6 ). but the quarterly path is sure to be uneven and there remains a risk of setbacks. and even if things turn out well, it is likely to be a considerable time before the substantial margin of underutilised resources in the economy developed in the downturn is whittled away ( chart 7 ). for more analysis of the impact of quantitative easing, see : david miles, “ interpreting monetary policy ”, speech at imperial college business school, london, 25 february 2010 ; and spencer dale, “ qe one year on ”, speech at cimf / mmf conference, cambridge, 12 march 2010. that brings me naturally to inflation, the mpc ’