Jon Cunliffe: A little bit of stodginess?

Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at the Cumbria Chambers of Commerce, Kendal, 13 July 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

"In my view both as a citizen and as a policymaker, a little stodginess at the central bank is entirely appropriate"1

Alan Blinder's 1999 advice to central bankers, quoted above, was not, I am pleased to say in these fitness conscious times, an injunction on the appropriate nutrition for monetary policy makers.

Rather, it was advice on how to respond to uncertainty or, to be precise, the need for caution when faced with a particular type of uncertainty - uncertainty about the impact of monetary policy on the key variables in the economy it seeks to influence.

But I would like today to look at the case for 'stodginess' when faced with uncertainty more generally about possible changes in how the economy works and the 'model' of the economy that policymakers necessarily have in their minds.

Uncertainty, as I have noted before is the natural environment of monetary policy. There is a large academic literature on the optimal way for policy to deal with different types of uncertainty. But I would like to look at these issues first in the context of my time on the MPC and then in relation UK monetary policy going forward.