David Ramsden: Back to the future 2 - keeping inflation close to the 2% target

Speech by Sir David Ramsden, Deputy Governor for Markets and Banking of the Bank of England, at Leeds University Business School, Leeds, 20 November 2024.

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

Central bank speech  | 
29 November 2024

Thank you for the invitation to speak today. It's a pleasure to be here at the Leeds University Business School. And it's great to be able to get here after a short trip across the city from the offices of the Bank of England in Yorkshire House, where I've been meeting with colleagues who work there. The Bank has had a significant presence in Leeds for 200 years and we have committed to basing at least 500 staff here by 2027.

My speech is a sequel to one I gave a year ago. I'm going to start with an assessment of how the UK economy has developed over the last 12 months, comparing the forecasts the Monetary Policy Committee (MPC) has produced in the Monetary Policy Reports (MPR) over that period. I'll then set out why I think looking back can help us think about the future, framing my thinking on the outlook with the three cases the MPC have considered to help illustrate the range of possible outcomes on the degree of inflation persistence. I've added a sub-title to the speech reflecting the main plotline since this spring, which is that UK inflation has returned to close to our 2% target. I will conclude with my view as an MPC member on how monetary policy can continue to be set to keep inflation close to target.

Our assessment is based on Bank Staff's latest modelling of the UK economy. We are working hard on responding to the recommendations of the Bernanke Review. That is not my subject for today but the Bank will provide an update on its response to the Bernanke Review next Monday. But for today's purposes I do want to stress that I am very supportive of our approach to the November MPC round where we used three alternative cases for how the persistence of inflationary pressures may influence the state of the economy, as this continues to be the key judgement for monetary policy. In a global economy increasingly characterised by significant shocks and increased uncertainty, having the capability to efficiently and effectively model a wide range of economic scenarios is going to get ever more important.