This conference is focused on one important element of this: the role of financial markets in the setting and transmission of monetary policy. That is covered in the Bank’s publications on how the economy works, including the Committee’s 1999 paper on the Monetary Transmission Mechanism (MTM), and books describing the models used in forecasting.
A strong correlation was observed after the national parliamentary elections in January this year and again in June when the Greek referendum was announced and capital controls were imposed. The recent spike in the VIX to five-year highs failed to trigger any serious reaction in either Greek government bonds or even other euro area periphery bonds.