Bank of England’s Chief Economist delivers speech on monetary policy at Cardiff Business School

Huw Pill, Bank of England’s Chief Economist and Executive Director for Monetary Analysis, recently delivered a speech on communicating monetary policy at Cardiff Business School.

Addressing staff and students at Cardiff Business School on Friday 1 March 2024, he discussed the design and performance of the strategy that guides monetary policy decisions in the UK. He also gave his view on the current economic outlook and its implications for monetary policy.

During the speech, Huw explained the importance of the Monetary Policy Committee (MPC) having a strategy that provides the framework for planning for future contingencies and preparing tools and actions to respond to them.

Discussing the benefits of making the monetary policy strategy known to and understood by key stakeholders, he explained that transparency plays a central role.

Looking to the future, The Bank of England will likely adopt a new, scenarios-based system for economic forecasting, allowing it to show what might happen to interest rates in the event of shocks such as a total closure of the Red Sea to shipping.

Huw said he favours a system involving "more communication on the 'What ifs’, rather than focusing on a central projection for the economy and inflation.”

Former Federal Reserve Chair, Ben Bernanke, is finalising a review of the MPC’s forecasts. Huw explained that this could prove to be "a once-in-a-lifetime opportunity for us to modernise our monetary policy framework". He added that the MPC and Bank of England could “seek to learn the lessons of recent experience and evolve accordingly to make their monetary policy framework more robust and effective.”

To conclude the event, Professor Melanie Jones hosted a Q&A session with the audience. Topics covered included the fundamental determinants of inflation and whether economic growth, as well as stability, is a target for The Bank of England.

Read the full speech.